As filed with the Securities and Exchange Commission on February 23, 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)
<PAGE>
Copies to:
Brian D. Alprin, Esq. Lawrence R. Wiseman, Esq.
Laurence S. Lese, Esq. Blank Rome Comisky & McCauley LLP
Duane, Morris & Heckscher LLP One Logan Square
1667 K Street, NW, Suite 700 Philadelphia, PA 19103-6998
Washington, DC 20006 (215) 569-5500
(202) 776-7800
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the registration statement is declared effective and
all of the conditions to the proposed merger of Pioneer American Holding Company
Corp. 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. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Each Class of Proposed Maximum
Securities to be Amount to be Offering Price Per Maximum Aggregate Amount of
Registered Registered (1) Unit Offering Price (4) Registration Fee
<S> <C> <C> <C> <C>
Common Stock, 5,200,000 (2) (3) $63,372,792 $16,731
$.01 par value per
share
</TABLE>
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(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 Pioneer
American 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 on the average of the bid and
asked price per share of Pioneer American common stock, par value
$1.00 per share, on February 18, 2000 on the Nasdaq Bulletin Board,
<PAGE>
multiplied by an aggregate of 2,864,307 shares of Pioneer American
common stock to be acquired by NBT.
---------------
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 [PIONEER AMERICAN
LOGO APPEARS HERE] LOGO APPEARS HERE]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of NBT Bancorp Inc. and Pioneer American
Holding Company Corp. have unanimously agreed on a merger of Pioneer American
and NBT. Following the merger, NBT will be the surviving corporation. The board
of directors of each company believes that the merger is in the best interests
of its stockholders and unanimously recommends that its stockholders vote to
approve the merger agreement. Each of us will hold a meeting of our stockholders
to consider and vote upon the merger agreement and related matters. NBT
stockholders will also consider and vote upon the issuance of NBT common stock
to the Pioneer American stockholders in the merger.
Pioneer American stockholders will receive as merger consideration
1.805 shares of NBT common stock for each share of Pioneer American common stock
owned. We expect the merger to be a tax-free transaction for Pioneer American
stockholders, except for any cash they receive instead of fractional shares of
NBT common stock. After completion of the merger, the stockholders of NBT and
the former stockholders of Pioneer American will own, respectively,
approximately 78% and 22% of the outstanding stock of the combined company. NBT
common stock trades on the Nasdaq National Market under the symbol "NBTB."
We cannot complete the merger unless the stockholders of both companies
approve it. Approval of the stock issuance and ratification of the merger
agreement requires the affirmative vote of the holders of a majority of the
shares of NBT common stock present and voting and entitled to vote. Approval of
the merger agreement requires the affirmative vote of the holders of seventy
percent of the outstanding shares of Pioneer American common stock entitled to
vote. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
The dates, times and places of the stockholders' meetings are as
follows:
FOR NBT STOCKHOLDERS: FOR PIONEER AMERICAN STOCKHOLDERS:
April 25, 2000 at 10:00 a.m. local time April 25, 2000 at 10:00 a.m. local time
The Binghamton Regency Hotel Heart Lake Lodge
and Conference Center 1299 Heart Lake Road
225 Water Street, One Sarbro Square Jermyn, Pennsylvania
Binghamton, New York
This joint proxy statement/prospectus provides you with detailed
information about the merger and the other matters that we will submit for
stockholder approval at NBT's and Pioneer American's stockholders' meetings. We
encourage you to read this entire document carefully.
/s/ Daryl R. Forsythe /s/ John W. Reuther
Daryl R. Forsythe John W. Reuther
President and Chief Executive Officer President and Chief Executive Officer of
of NBT Bancorp Inc. Pioneer American Holding Company Corp.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE NBT SHARES TO BE ISSUED UNDER THIS JOINT PROXY
STATEMENT/PROSPECTUS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF NBT COMMON STOCK OFFERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS
ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF ANY OF THE PARTIES. THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY DOES
NOT INSURE OR GUARANTEE ANY LOSS TO YOU OF YOUR INVESTMENT VALUE IN THE NBT
COMMON STOCK.
Joint proxy statement/prospectus dated , 2000, and first
mailed to stockholders on or about , 2000.
<PAGE>
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NBT Bancorp Inc., a Delaware corporation, will hold an annual meeting
of stockholders at the Binghamton Regency Hotel and Conference Center, 225 Water
Street, One Sarbro Square, Binghamton, New York on April 25, 2000 at 10:00 a.m.
local time for the following purposes:
1. Election of Directors. To fix the number of directors at twelve
and to elect the six candidates listed in the joint proxy statement/prospectus.
2. To ratify the Board of Directors' action in its selection of its
independent auditor for the year 2000.
3. To consider and vote upon a proposal to issue approximately 5.2
million shares of NBT common stock in the merger and to ratify the Agreement and
Plan of Merger, dated as of December 7, 1999, between NBT and Pioneer American
Holding Company Corp., a Pennsylvania corporation, which will approve the merger
and the following actions described in the merger agreement:
|X| Pioneer American will merge with a subsidiary of NBT, with Pioneer
American being the surviving corporation,
|X| Following the first merger, Pioneer American will merge with and
into NBT, with NBT being the surviving corporation, and
|X| NBT will issue approximately 5.2 million shares of common stock to
the Pioneer American stockholders upon completion of the merger.
4. To transact such other business as may properly come before the
NBT annual meeting.
We describe more fully the election of directors, selection of the
independent auditor, the issuance of NBT common stock and the merger agreement,
the merger and related matters in the attached joint proxy statement/prospectus,
which includes a copy of the merger agreement as Appendix A.
We have fixed the close of business on , 2000 as the record date for
determining those stockholders of NBT entitled to vote at the NBT annual 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 annual meeting.
The board of directors of NBT unanimously recommends that you vote
"FOR" approval of each of the nominated directors, including fixing the number
of directors at twelve, ratification of the NBT Board's selection of the
independent auditor, and the issuance of NBT common stock in the merger with
Pioneer American and ratification of the merger agreement, the mergers and the
other matters contemplated by the merger agreement. The affirmative vote of a
majority of the shares of NBT common stock present and voting and entitled to
vote at the meeting is required to approve the ratification of the auditor
proposal and the issuance of NBT common stock in the merger with Pioneer
American and the merger agreement and related matters. A plurality of the NBT
shares present and voting and entitled to vote at the meeting is required to
elect the nominated directors.
The board of directors of NBT requests that you fill in and sign the
enclosed proxy card and mail it promptly in the accompanying postage-prepaid
envelope. You may revoke any proxy that you deliver prior to the NBT meeting by
delivering a written notice to NBT stating that you have revoked your proxy or
by delivering a later dated proxy. Stockholders of record of NBT common stock
who attend the NBT meeting may vote in person, even if they have previously
delivered a signed proxy.
By Order of the Board of Directors of
NBT Bancorp Inc.
Daryl R. Forsythe
President and Chief Executive Officer
Norwich, New York
, 2000
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2
<PAGE>
PIONEER AMERICAN HOLDING COMPANY CORP.
41 NORTH MAIN STREET
CARBONDALE, PENNSYLVANIA 18407
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Pioneer American Holding Company Corp., a Pennsylvania corporation,
will hold a special meeting of stockholders at Heart Lake Lodge, 1299 Heart Lake
Road, Jermyn, Pennsylvania on April 25, 2000 at 10:00 a.m. local time for the
following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan
of Merger, dated as of December 7, 1999, by and between Pioneer American and NBT
Bancorp Inc., a Delaware corporation, and to approve the merger and other
transactions described in the merger agreement; and
2. To transact such other business as may properly come before the
Pioneer American special meeting.
We describe more fully the merger and related matters and transactions
in the attached joint proxy statement/prospectus, which includes as Appendix A a
copy of the merger agreement.
We have fixed the close of business on , 2000 as the record date for
determining the stockholders of Pioneer American entitled to vote at the Pioneer
American special meeting and any adjournments or postponements of the meeting.
Only holders of record of Pioneer American common stock at the close of business
on that date are entitled to notice of and to vote at the Pioneer American
special meeting.
The board of directors of Pioneer American recommends that you vote
"FOR" approval of the merger agreement, the merger and the other matters
contemplated by the merger agreement. The affirmative vote of seventy percent of
the outstanding shares of Pioneer American common stock entitled to vote at the
meeting is required to approve the merger agreement and related matters. Pioneer
American stockholders have a right to dissent to the merger agreement and to
obtain payment in cash of the fair value of their Pioneer American shares by
complying with the procedures described in the accompanying joint proxy
statement/prospectus.
The board of directors of Pioneer American requests that you fill in
and sign the enclosed proxy card and mail it promptly in the accompanying
postage-prepaid envelope. You may revoke any proxy that you deliver prior to the
Pioneer American special meeting by delivering a writing to Pioneer American
stating that you have revoked the proxy or by delivering a later dated proxy.
Stockholders of record of Pioneer American common stock who attend the Pioneer
American meeting may vote in person, even if they have previously delivered a
signed proxy.
By Order of the Board of Directors of
Pioneer American Holding Company Corp
John W. Reuther
President and Chief Executive Officer
Carbondale, Pennsylvania
, 2000
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3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER AND RELATED TRANSACTIONS
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this joint proxy statement/prospectus, just
indicate on your proxy card how you want your shares to be voted, then sign,
date and mail it in the enclosed postage-paid envelope as soon as possible so
that your shares may be represented and voted at the NBT annual meeting or the
Pioneer American special meeting.
In addition, you may attend your company's meeting in person and vote,
whether or not you have signed and mailed your proxy card.
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 all the proposals. If you
do not vote or abstain from voting, it will have the effect of a vote against
the proposals (other than regarding the election of directors, where a non-vote
will have no effect).
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: No. Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker. Your failure
to instruct your broker to vote your shares will be the equivalent of voting
against the adoption of the merger agreement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. There are three ways for you to revoke your proxy and change your vote.
First, you may send a 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 Pioneer American, as appropriate, prior to your company's meeting. If
you have instructed a broker to vote your shares, you must follow directions
received from your broker to change your vote.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. You should not send in your stock certificates at this time. NBT
stockholders will not exchange their certificates in the merger. The
certificates currently representing shares of NBT common stock will represent an
equal number of shares of common stock of the combined company after the merger.
Following the merger, NBT will mail instructions to all former Pioneer American
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. We
expect to complete the merger in the second quarter of 2000.
Q: WHOM SHOULD I CALL WITH QUESTIONS OR TO OBTAIN ADDITIONAL COPIES OF THIS
JOINT PROXY STATEMENT/PROSPECTUS?
NBT Bancorp Inc. Pioneer American Holding Company Corp.
52 South Broad Street 41 North Main Street
Norwich, New York 13815 Carbondale, Pennsylvania 18407
Attention: Michael J. Chewens, CPA Attention: Patricia A. Cobb, Esq.
Phone Number: (607) 337-6520 Phone Number: (570) 282-8045
4
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT....................................................................1
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS..........................................................................2
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS.........................................................................3
QUESTIONS AND ANSWERS ABOUT THE MERGER AND RELATED TRANSACTIONS...................................................4
SUMMARY...........................................................................................................9
The Merger...............................................................................................9
What Pioneer American Stockholders Will Receive as a Result of the Merger...........................9
NBT Stockholders Will Not Exchange Their NBT Shares.................................................9
Ownership of Combined Company Following the Merger..................................................9
Inclusion of Shares of NBT Stock for Trading on the Nasdaq National Market.........................10
NBT Plans to Continue its Dividend Policy Following the Merger.....................................10
Comparison of Pioneer American Stockholders' Rights Before and After the Merger....................10
Transaction Generally Tax-Free to Pioneer American Stockholders....................................11
Pioneer American Stockholders Will Have Dissenters' Rights.........................................11
Board of Directors and Management of the Combined Company Following the Merger.....................11
Comparative Per Share Market Price Information.....................................................11
Our Financial Advisors Believe the Exchange Ratio is Fair to Stockholders..........................12
We Expect "Pooling of Interests" Accounting Treatment..............................................12
When We Expect the Merger to Close.................................................................12
Our Reasons for the Merger..............................................................................12
We Recommend That NBT Stockholders Approve the Stock Issuance and Ratify the Merger Agreement
and That Pioneer American Stockholders Approve the Merger Agreement............................13
Other Interests of Pioneer American Officers and Directors in the Merger...........................13
Completion of the Merger Requires Satisfaction of Various Conditions...............................14
We May Amend the Terms of the Merger and Waive Some Conditions.....................................14
We May Decide Not to Complete the Merger...........................................................14
Pioneer American Has Granted NBT an Option to Purchase 19.9% of its Stock..........................15
We Have [Not Yet] Received the Required Regulatory Approvals.......................................15
The Companies...........................................................................................15
The Stockholders' Meetings..............................................................................16
You May Change Your Vote If You Wish....................................................................17
Additional Information..................................................................................18
Selected Historical and Pro Forma Combined Financial Data...............................................19
Unaudited Comparative Per Share Data....................................................................26
THE STOCKHOLDERS' MEETINGS.......................................................................................27
The NBT Annual Meeting..................................................................................27
When and Where the NBT Annual Meeting Will Be Held.................................................27
What Will Be Voted on at the NBT Annual Meeting....................................................27
Stockholders Entitled to Vote......................................................................27
Vote Required to Approve the Proposals.............................................................27
Number of Shares that Must Be Represented for a Vote to Be Taken...................................28
Voting Your Shares.................................................................................28
How Proxies Are Counted............................................................................28
Changing Your Vote.................................................................................29
Independent Auditors to Be Present at the Annual Meeting...........................................29
Solicitation of Proxies and Costs..................................................................29
5
<PAGE>
Recommendations of NBT Board.......................................................................29
The Pioneer American Special Meeting...............................................................30
When and Where the Pioneer American Special Meeting Will Be Held...................................30
What Will Be Voted on at the Pioneer American Special Meeting......................................30
Stockholders Entitled to Vote......................................................................30
Vote Required to Approve the Merger................................................................30
Number of Shares that Must Be Represented for a Vote to Be Taken...................................31
Voting Your Shares.................................................................................31
How Proxies Are Counted............................................................................31
Changing Your Vote.................................................................................31
Independent Auditors to Be Present at the Special Meeting..........................................32
Solicitation of Proxies and Costs..................................................................32
Recommendation of Pioneer American Board...........................................................32
PROPOSAL 1.......................................................................................................32
ELECTION OF DIRECTORS...................................................................................32
Board Meetings and Committees of the Board..............................................................36
Nominating, Organization and Board Affairs Committee:..............................................36
Compensation and Benefits Committee................................................................37
Audit, Compliance and Loan Review Committee........................................................37
Section 16(a) Beneficial Ownership Reporting Compliance.................................................37
Compensation of Directors and OfficersBoard of Directors Fees...........................................37
Executive Compensation.............................................................................38
Option Grants Information..........................................................................39
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values...................39
Retirement Plan....................................................................................40
Employment Contracts and Termination of Employment ................................................41
Change In Control Contracts........................................................................41
Supplemental Retirements Benefits..................................................................42
Daryl R. Forsythe Employment.......................................................................42
Compensation Committee Interlocks and Insider Participation........................................42
Compensation Committee Report On Executive Compensation............................................43
Members of the Compensation and Benefits Committee.................................................45
401(k) and Employee Stock Ownership Plan...........................................................45
Stock Option Plan..................................................................................46
Federal Income Tax Consequences....................................................................47
Executive Incentive Compensation Plan..............................................................48
Personal Benefits..................................................................................48
Related Party Transactions ........................................................................49
Performance Graph..................................................................................49
PROPOSAL 2.......................................................................................................50
PROPOSAL TO RATIFY THE BOARD OF DIRECTORS ACTION IN SELECTION OF KPMG LLP AS NBT'S INDEPENDENT AUDITOR..50
PROPOSAL 3.......................................................................................................51
THE ISSUANCE OF NBT COMMON STOCK IN THE MERGER AND RATIFICATION OF THEMERGER AGREEMENT .................51
General............................................................................................51
Background of the Merger...........................................................................51
Recommendation of the NBT Board and NBT's Reasons for the Stock Issuance and the Merger............54
Recommendation of NBT's Board of Directors.........................................................56
Recommendation of the Pioneer American Board and Pioneer American Reasons for the Merger...........56
Recommendation of Pioneer American's Board of Directors............................................57
Merger Consideration...............................................................................57
Opinion of NBT's Financial Advisor.................................................................58
6
<PAGE>
Lake Ariel Transaction.............................................................................61
Compensation of MB&D...............................................................................63
Opinion of Pioneer American's Financial Advisor....................................................64
Other Interests of Officers and Directors in the Merger............................................68
Stock Option Agreement.............................................................................71
Accounting Treatment...............................................................................74
Dissenters' or Appraisal Rights....................................................................75
Inclusion of NBT's Common Stock on Nasdaq National Market..........................................75
Dividends..........................................................................................75
Exchange of Pioneer American Certificates..........................................................75
Pioneer American Stock Options.....................................................................76
Representations and Warranties.....................................................................76
Conduct of Business Pending Completion of the Merger...............................................77
Conditions to Complete the Merger..................................................................80
Termination and Termination Fees ..................................................................81
Amendment and Waiver...............................................................................83
Survival of Certain Provisions.....................................................................83
Restrictions on Resales by Affiliates..............................................................84
Fees for Financial Advisory Services...............................................................84
Allocation of Costs and Expenses...................................................................85
THE COMPANIES....................................................................................................85
NBT Bancorp Inc....................................................................................85
Pioneer American Holding Company Corp..............................................................86
NBT Following the Merger...........................................................................86
REGULATION AND SUPERVISION.......................................................................................86
Support of Subsidiary Banks........................................................................87
Liability of Commonly Controlled Banks.............................................................88
Depositor Preference Statute.......................................................................88
Capital Requirements...............................................................................88
Brokered Deposits..................................................................................90
Dividend Restrictions..............................................................................90
Deposit Insurance Assessments......................................................................90
Interstate Banking and Branching...................................................................91
Control Acquisitions...............................................................................91
Financial Modernization............................................................................92
Future Legislation.................................................................................92
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.........................................................................92
PRICE RANGE OF COMMON STOCK AND DIVIDENDS........................................................................93
DESCRIPTION OF NBT CAPITAL STOCK ................................................................................94
Authorized Capital Stock...........................................................................94
Common Stock.......................................................................................95
Preferred Stock....................................................................................95
Stockholder Rights Plan............................................................................95
Registrar and Transfer Agent.......................................................................96
COMPARISON OF STOCKHOLDERS' RIGHTS...............................................................................96
Special Meetings of Stockholders...................................................................99
Inspection of Voting List of Stockholders..........................................................99
Cumulative Voting.................................................................................100
Preemptive Rights.................................................................................100
Classification of the Board of Directors..........................................................100
7
<PAGE>
Election of the Board of Directors................................................................100
Removal of Directors..............................................................................100
Additional Directors and Vacancies on the Board of Directors......................................100
Liability of Directors............................................................................101
Indemnification of Directors, Officers, Employees and Agents......................................101
Restrictions upon Certain Business Combinations...................................................102
Mergers, Share Exchanges or Asset Sales...........................................................104
Amendments to Certificate and Articles of Incorporation...........................................104
Amendments to Bylaws..............................................................................105
Appraisal/Dissenters' Rights......................................................................105
RIGHTS OF DISSENTING STOCKHOLDERS...............................................................................106
Step One - Notice of Intention to Dissent.........................................................106
Step Two - Notice to Demand Payment...............................................................106
Step Three - Failure to Comply with the Notice to Demand Payment..................................106
Step Four - Payment of Fair Value of Pioneer American Shares......................................106
Step Five - Estimate by Dissenter of Fair Value of Shares.........................................107
Step Six - Valuation Proceedings..................................................................107
OTHER MATTERS...................................................................................................108
Stockholder Proposals for Annual Meetings.........................................................108
Other Matters.....................................................................................108
LEGAL MATTERS...................................................................................................108
EXPERTS.........................................................................................................108
WHERE YOU CAN FIND MORE INFORMATION.............................................................................109
NBT Bancorp Inc. SEC Filings......................................................................109
Pioneer American Holding Company Corp. SEC Filings................................................109
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ..............................................................110
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS......................................................124
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.......................................................127
</TABLE>
Appendix A -- Agreement and Plan of Merger
Appendix B -- Fairness Opinion of McConnell, Budd & Downes, Inc.
Appendix C -- Fairness Opinion of Danielson Associates Inc.
Appendix D -- Sections 1571 through 1580 of the Pennsylvania Business
Corporation Law, regarding dissenters' rights
8
<PAGE>
SUMMARY
This brief summary does not contain all of the information that is
important to you. You should carefully read this entire document and the
documents to which we have referred you to fully understand the merger. See
"Where You Can Find More Information" on page 109.
THE MERGER
WHAT PIONEER AMERICAN STOCKHOLDERS WILL RECEIVE AS A RESULT OF THE MERGER
(SEE PAGE 57)
Pioneer American stockholders will receive 1.805 shares of NBT common
stock for each share of Pioneer American common stock that they own.
The merger agreement provides for adjustment of the exchange ratio:
|X| either upwards or downwards if a stock dividend, split-up,
merger, recapitalization, combination, conversion, exchange of
shares or similar transaction occurs with respect to either
NBT common stock or Pioneer American common stock; or
|X| upwards but not downwards if:
(1) the price of a share of NBT common stock declines below
$15.00, and
(2) the NBT stock price decline, expressed as a percentage, is
more than 15 percentage points greater than the weighted
average stock price decline of the index group, and
(3) Pioneer American exercises its right to terminate the
merger as a result of NBT's price decline, subject to NBT's
right to require Pioneer American to complete the merger if
NBT increases the exchange ratio as provided in the merger
agreement, and
(4) NBT elects to increase the exchange ratio in that manner.
See "The Issuance of NBT Common Stock in the Merger and Ratification of
the Merger Agreement -- Termination and Termination Fees -- Termination Upon a
Decline in the Value of NBT Common Stock" for a more comprehensive discussion of
this termination provision and examples of possible alternative exchange ratios.
We will not issue fractional shares of NBT common stock in the merger.
Any Pioneer American common stockholder who would otherwise be entitled to
receive a fraction of a share of NBT common stock will instead receive cash for
such fractional share.
Pioneer American stockholders should not send in their stock
certificates for exchange until instructed to do so after we complete the merger
(see page 75).
NBT STOCKHOLDERS WILL NOT EXCHANGE THEIR NBT SHARES
Stockholders of NBT will continue to own their existing shares after
the merger.
OWNERSHIP OF COMBINED COMPANY FOLLOWING THE MERGER
As a result of the merger, the former Pioneer American stockholders
will own approximately 22% of the outstanding common stock of NBT, assuming no
Pioneer American stockholder exercises dissenters' rights. The stockholders of
NBT will own approximately 78% of the outstanding stock of NBT.
9
<PAGE>
INCLUSION OF SHARES OF NBT STOCK FOR TRADING ON THE NASDAQ NATIONAL MARKET
(SEE PAGE 75)
NBT will list the shares of common stock to be issued to Pioneer
American common stockholders in the merger on the Nasdaq National Market. After
the merger, NBT will deregister the Pioneer American common stock for purposes
of the Securities Exchange Act of 1934.
NBT PLANS TO CONTINUE ITS DIVIDEND POLICY FOLLOWING THE MERGER (SEE PAGE 75)
The current annualized rate of cash dividends on the shares of NBT
common stock is $0.68 per share. After the merger, NBT expects that it will
continue to pay quarterly cash dividends in a manner that is consistent with its
past practices, subject to approval and declaration by its board. The payment of
cash dividends by NBT in the future will depend on its financial condition and
earnings, business conditions and other factors.
COMPARISON OF PIONEER AMERICAN STOCKHOLDERS' RIGHTS BEFORE AND AFTER THE MERGER
(SEE PAGE 96)
We have summarized below the material differences in the rights of the
stockholders of Pioneer American and NBT. After the merger, Pioneer American
stockholders will have the same rights as NBT stockholders.
<TABLE>
<CAPTION>
NBT BANCORP INC. PIONEER AMERICAN HOLDING COMPANY CORP.
<S> <C>
NBT is a Delaware corporation and the rights of its Pioneer American is a Pennsylvania corporation and the
stockholders are generally subject to the corporate law rights of its stockholders are generally subject to
of Delaware. the corporate law of Pennsylvania.
Under NBT's bylaws, NBT stockholders have the right Under Pioneer American's bylaws, special meetings of
to call a special stockholders' meeting at the written the shareholders may be called at any time by the
request of at least 50% of all shares entitled to Board of Directors or by any three or more
vote at the meeting. shareholders entitled to cast at least twenty-five (25%)
of the vote which all shareholders are entitled to cast at
a particular meeting.
NBT's Certificate of Incorporation and Delaware law limit The Pioneer American Articles of Incorporation require
the ability of a Delaware corporation to enter into a a 70% vote of the stockholders to approve any merger
business combination with an interested stockholder and or consolidation, liquidation or dissolution, or any
require an 80% vote of the outstanding NBT shares to sale or other disposition of all or substantially all
accomplish such transactions. of the assets of the corporation. Moreover,
Pennsylvania law restricts business combinations with
interested stockholders.
Under Delaware law, NBT stockholders may have Under Pennsylvania law, Pioneer American
appraisal rights to dissent from a statutory merger or stockholders have dissenters' rights to dissent from a
consolidation and obtain the fair value in cash of their merger, consolidation, a sale, lease, exchange or
shares of NBT common stock, depending upon the disposition of all or substantially all of the property or
type of consideration they receive in exchange for their assets of a Pennsylvania corporation, or for other
shares. No appraisal or dissenters' rights are available fundamental changes in the corporation and to obtain
to NBT stockholders in the merger. the fair value in cash of their shares of Pioneer
American common stock.
</TABLE>
10
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TRANSACTION GENERALLY TAX-FREE TO PIONEER AMERICAN STOCKHOLDERS (SEE PAGE 92)
Pioneer American Stockholders. We expect the merger to be tax-free to Pioneer
American stockholders who receive shares of NBT common stock. Cash received by
Pioneer American stockholders instead of fractional shares in the merger
generally will be taxable.
NBT Stockholders. Neither NBT nor its stockholders will recognize gain or loss
as a result of the merger.
NBT and Pioneer American 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.
PIONEER AMERICAN STOCKHOLDERS WILL HAVE DISSENTERS' RIGHTS (SEE PAGES 75 AND
105)
Pioneer American. Under Pennsylvania law, the Pioneer American stockholders have
dissenters' rights to the payment in cash of the fair value of their shares of
Pioneer American common stock in connection with the merger. TO PERFECT THEIR
DISSENTERS' RIGHTS, HOLDERS OF THESE SHARES OF PIONEER AMERICAN COMMON STOCK
MUST FOLLOW REQUIRED STATUTORY PROCEDURES, INCLUDING FILING NOTICES WITH PIONEER
AMERICAN, AND EITHER ABSTAINING OR VOTING AGAINST THE MERGER AGREEMENT AND THE
MERGER. If you hold shares of Pioneer American common stock and you dissent from
the merger agreement and the merger and follow the required procedures, your
shares of Pioneer American common stock will not become shares of NBT common
stock upon completion of the merger. Instead, your only right will be to receive
the value of your shares in cash. We have attached the applicable provisions of
Pennsylvania law related to dissenters' rights to this joint proxy
statement/prospectus as Appendix D.
NBT. Under Delaware law, the NBT 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 86)
In connection with the merger and subject to the fiduciary duties of
its directors to NBT, NBT will increase the size of its board of directors from
twelve directors to fifteen directors. The present NBT Board will appoint three
individuals who are presently directors of Pioneer American to serve on the NBT
Board following the merger.
After the merger, the current executive officers of NBT will continue
to hold the same offices. NBT intends that Mr. John W. Reuther, the current
President and Chief Executive Officer of Pioneer American and its subsidiary,
Pioneer American Bank, continue to function as President and Chief Executive
Officer of the subsidiary bank until such time as NBT merges Pioneer American
Bank into the successor entity which will include all of the northeastern
Pennsylvania operations, at which time Mr. Reuther will become President and
Chief Operating Officer of that successor wholly-owned subsidiary of NBT.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (SEE PAGE 93)
Shares of NBT common stock trade on the Nasdaq National Market. The
shares of Pioneer American common stock trade in the over-the-counter market,
and the trades of Pioneer American common stock are reported on the Nasdaq
bulletin board. On December 7, 1999, 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 Pioneer American common stock were as follows:
DECEMBER 7, 1999 , 2000
---------------- -----------------
NBT................................. $16.25 $
Pioneer American ................... $27.75 $
Equivalent Market Value Per
Share of Pioneer American ...... $29.33 $
11
<PAGE>
The market prices of NBT common stock and Pioneer American common stock
will fluctuate prior to the merger in the normal course of trading on a
day-to-day basis. You should obtain current stock price quotations for NBT
common stock and Pioneer American 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 58 AND 64)
NBT. NBT received an opinion from McConnell, Budd & Downes, Inc., its financial
advisor, to the effect that as of the date of such opinion the exchange ratio
was fair to the stockholders of NBT from a financial point of view. McConnell,
Budd & Downes subsequently affirmed its opinion as of the date of this joint
proxy statement/prospectus. We attach a copy of the McConnell, Budd & Downes
opinion as Appendix B.
Pioneer American. Pioneer American received an opinion from Danielson Associates
Inc., its financial advisor, to the effect that the financial consideration
which Pioneer American stockholders will receive in the merger was fair to the
Pioneer American stockholders from a financial point of view. We attach the
written opinion of Danielson as Appendix C to this joint proxy
statement/prospectus.
We recommend that each NBT stockholder and each Pioneer American
stockholder read each opinion carefully in their entirety to understand the
assumptions made, matters considered, and limitations on review undertaken by
each financial advisor.
WE EXPECT "POOLING OF INTERESTS" ACCOUNTING TREATMENT (SEE PAGE 74)
We expect the merger to qualify as a "pooling of interests." This means
that, for accounting and financial reporting purposes, we will treat our
companies as if they had always been one company. We will not be required to
complete the merger unless we receive a letter from our independent auditor
stating that the merger qualifies for pooling of interests accounting treatment.
WHEN WE EXPECT THE MERGER TO CLOSE (SEE PAGE 51)
We expect completion of the merger as soon as practicable following
approval of the merger by the stockholders of NBT and Pioneer American at their
respective stockholders meetings and satisfaction of all other conditions to the
merger. We anticipate completion of the merger during the second quarter of
2000.
OUR REASONS FOR THE MERGER
NBT. We recommend the merger because:
|X| the merger will permit NBT to diversify its operations by
broadening its operations in Pennsylvania beyond the market
area of LA Bank, which NBT acquired in February, 2000
|X| the merger will afford NBT an opportunity to expand the
delivery of its financial services, especially its trust
services, to a broader and more disparate customer base
|X| the financial resources of the combined company following the
merger will permit NBT to broaden its product capabilities and
services, respond to changes in the financial services
industry, and compete more effectively with other financial
institutions within its expanded geographical service area
|X| the anticipated positive financial impact of the merger upon
NBT's future financial performance will enhance stockholder
return by achieving operating efficiencies and cost savings
12
<PAGE>
To review the NBT Board's reasons for the merger in greater detail, see
page 54.
Pioneer American. We recommend the merger because:
|X| NBT offers a broader range of products and services and the
merger would provide Pioneer American customers with access to
these products and services without Pioneer American having to
undergo the expense of introducing them on its own
|X| the exchange ratio resulted in a value of $29.33 per share or
5.7% premium to the closing price of Pioneer American common
stock on December 7, 1999 and an increase of dividends per
share to approximately $.307 ($1.228 annualized) or an
increase of approximately 53.5% on December 7, 1999
|X| the anticipated cost savings and efficiencies available to the
combined company could result in a better return to Pioneer
American stockholders
To review the Pioneer American Board's reasons for the merger in
greater detail, see page 56.
WE RECOMMEND THAT NBT STOCKHOLDERS APPROVE THE STOCK ISSUANCE AND RATIFY THE
MERGER AGREEMENT AND THAT PIONEER AMERICAN STOCKHOLDERS APPROVE THE MERGER
AGREEMENT (SEE PAGES 54 AND 56)
NBT. The NBT Board believes that the merger is fair to you and is in your best
interests, and unanimously recommends that you vote FOR the proposal to approve
the issuance of NBT common stock in the merger and to ratify the merger
agreement, the merger and the related matters.
Pioneer American. The Pioneer American Board believes that the merger is fair to
you and is in your best interests, and unanimously recommends that you vote FOR
the proposal to approve the merger agreement, the merger and the related
matters.
OTHER INTERESTS OF PIONEER AMERICAN OFFICERS AND DIRECTORS IN THE MERGER
(SEE PAGE 68)
Several officers and directors, who are also stockholders, of Pioneer
American will receive benefits as a result of the merger that are different
from, or in addition to, the benefits you will receive. These benefits include
the following:
|X| John W. Reuther, President and Chief Executive Officer of
Pioneer American, will receive an employment agreement with
NBT, following the merger;
|X| some Pioneer American officers will receive change-in-control
agreements with NBT, which provide for severance benefits upon
termination of their employment upon a covered change in
control (see "The Issuance of NBT Common Stock in the Merger
and Ratification of the Merger Agreement -- Other Interests of
Officers and Directors in the Merger -- Change-in-Control
Agreements");
|X| NBT will assume and continue in effect some retirement and
insurance agreements between Pioneer American and/or Pioneer
American Bank and Mr. Reuther after the merger;
|X| NBT will take no action to reduce any right to indemnification
provided under Pioneer American's Articles of Incorporation or
bylaws existing in favor of the current or former directors or
officers of Pioneer American; and
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<PAGE>
|X| Following the effective time of the merger and to the extent
permitted by law, all rights to such indemnification will
survive, and NBT will honor such obligations with respect to
events, acts, or omissions occurring prior to the merger.
COMPLETION OF THE MERGER REQUIRES SATISFACTION OF VARIOUS CONDITIONS
(SEE PAGE 80)
We must satisfy a number of conditions before completion of the merger,
including:
|X| approval of the common stock issuance and ratification of the
merger proposal by the NBT stockholders;
|X| approval of the proposed merger by Pioneer American
stockholders;
|X| approval by government regulators;
|X| authorization by Nasdaq of the inclusion on the Nasdaq
National Market of the NBT common stock to be issued to
Pioneer American stockholders;
|X| NBT and Pioneer American receive a legal opinion regarding
treatment of the merger as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as
amended; and
|X| NBT receives a letter from its independent auditor stating
that the merger qualifies for "pooling of interests"
accounting treatment.
Where the law permits, NBT or Pioneer American may waive some of the
conditions to the merger if it deems such a waiver to be in the best interests
of its stockholders. Although we anticipate completing the merger during the
second quarter of 2000, we cannot be certain when (or if) the conditions to the
merger will be satisfied or when we will complete the merger.
WE MAY AMEND THE TERMS OF THE MERGER AND WAIVE SOME CONDITIONS (SEE PAGE 83)
We may jointly amend the terms of the merger, and each of us could
elect to waive conditions to completion of the merger, to the extent legally
permissible. However, after our stockholders approve the merger agreement and
the merger, they must approve any amendment or waiver that would reduce or
change the consideration that they will receive upon completion of the merger.
WE MAY DECIDE NOT TO COMPLETE THE MERGER (SEE PAGE 80)
We can agree to terminate the merger agreement at any time. In
addition, either of us may terminate the merger agreement if any of the
following occurs:
|X| the merger is not completed by July 31, 2000;
|X| a determination that the other party has materially breached
the merger agreement, and has not cured the breach within the
time allowed, or a determination that the representations and
warranties of the other company were materially incorrect when
made; or
|X| a decline in the price of NBT common stock beyond the limits
specified in the merger agreement and Pioneer American
exercises its right to cancel the merger, subject to NBT's
right to increase the exchange ratio and NBT elects not to
increase the exchange ratio.
PIONEER AMERICAN HAS GRANTED NBT AN OPTION TO PURCHASE 19.9% OF ITS STOCK (SEE
PAGE 71)
14
<PAGE>
As a condition to NBT's willingness to enter into the merger agreement,
and to discourage other companies from attempting to acquire Pioneer American,
Pioneer American granted NBT an option to purchase up to 19.9% of the Pioneer
American common stock outstanding immediately before the exercise of such option
at an exercise price of $24.00 per share. The option is exercisable only upon
occurrence of specified events that would be ordinarily associated with an
acquisition or potential acquisition of Pioneer American by a third party.
WE HAVE [NOT YET] RECEIVED THE REQUIRED REGULATORY APPROVALS
Completion of the merger requires the approval by the Federal Reserve
Board and the Pennsylvania Department of Banking. The U.S. Department of Justice
has input into this approval process. Once the Federal Reserve Board approves
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 and notices with the
Federal Reserve Board and the Pennsylvania Department of Banking. As of the date
of this document, we have not yet received the required approvals. While we do
not know of any reason why we would not be able to obtain the necessary
approvals in a timely manner, we cannot be certain when or if we will get them.
[THE FEDERAL RESERVE BOARD APPROVED THE MERGER ON , 2000. THE PENNSYLVANIA
DEPARTMENT OF BANKING APPROVED THE MERGER ON , 2000.]
THE COMPANIES
NBT BANCORP INC.
52 South Broad Street
Norwich, New York 13815
(607) 337-2265
NBT, a registered bank holding company incorporated in the State of
Delaware, is the parent holding company of NBT Bank, N.A., a national bank. NBT
Bank is a full service commercial bank providing a broad range of financial
products and services in central and northern New York. In fiscal year 1999,
NBT's net income was $18.4 million while in fiscal year 1998, NBT's net income
was $19.1 million. As of December 31, 1999, NBT's total assets were
approximately $1.4 billion, total deposits were approximately $1.1 billion and
stockholders' equity was approximately $126.5 million. On February 17, 2000, NBT
completed its acquisition of Lake Ariel Bancorp, Inc., the parent holding
company of LA Bank, National Association. 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. In fiscal year 1999, Lake
Ariel's net income was $3.8 million and in fiscal year 1998, Lake Ariel's net
income was $3.8 million. As of December 31, 1999, Lake Ariel's total assets were
approximately $567.8 million, total deposits were approximately $369.5 million
and stockholders' equity was approximately $33.3 million. We enclose with this
joint proxy statement/prospectus a copy of NBT's annual report on SEC Form 10-K
for the year ended December 31, 1999.
PIONEER AMERICAN HOLDING COMPANY CORP.
41 North Main Street
Carbondale, Pennsylvania 18407
(570) 282-2662
Pioneer American, a registered bank holding company incorporated in the
Commonwealth of Pennsylvania, is the parent holding company of Pioneer American
Bank, National Association. Pioneer American Bank provides commercial banking
products and services in northeastern Pennsylvania. In fiscal year 1999, Pioneer
American's net income was $4.1 million while in fiscal year 1998, Pioneer
American's net income was $4.0 million. As of December 31, 1999, Pioneer
American's total assets were approximately $418.8 million, total deposits were
approximately $299.5 million and stockholders' equity was approximately $31.6
million. We enclose with this joint proxy statement/prospectus a copy of Pioneer
American's annual report on SEC Form 10-K for the year ended December 31, 1999.
15
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THE STOCKHOLDERS' MEETINGS
NBT. NBT will hold its annual meeting of stockholders at the Binghamton Regency
Hotel and Conference Center, 225 Water Street, One Sarbro Square, Binghamton,
New York on April 25, 2000 at 10:00 a.m. local time. At the NBT annual
meeting, NBT stockholders will consider and vote upon the following proposals:
1. A proposal to fix the number of directors at twelve and to
elect the six candidates listed as nominees in this joint
proxy statement/prospectus;
2. A proposal to ratify the NBT Board's action of the selection
of KPMG LLP as NBT's independent auditor for the year 2000;
and
3. A proposal to approve the issuance of NBT common stock in the
merger and to ratify the merger agreement, which will approve
the merger and the following actions described in the merger
agreement:
|X| Pioneer American will merge with an NBT subsidiary,
with Pioneer American being the surviving
corporation;
|X| Pioneer American will thereafter merge with and into
NBT, with NBT being the surviving corporation;
|X| Pioneer American Bank will become a wholly-owned
subsidiary of NBT or part of the northeastern
Pennsylvania operations of any successor entity to
Pioneer American Bank;
|X| NBT will issue approximately 5.2 million shares of
its common stock to the stockholders of Pioneer
American in the merger; and
|X| Following the merger, the NBT Board will expand the
NBT Board from twelve to fifteen members, and,
subject to the fiduciary duties of its directors to
NBT, will elect or appoint three directors from the
current Pioneer American Board to the NBT Board.
Only holders of record of NBT common stock at the close of
business on , 2000, which is the record date for the NBT annual meeting, will be
entitled to vote at the NBT annual meeting and any adjournments or postponements
of the meeting. You can cast one vote for each share of NBT common stock that
you owned on the record date for each matter proposed at the NBT annual meeting.
Approval of the proposal to ratify the NBT Board's selection of NBT's
independent auditor requires the approval by the holders of a majority of the
shares of NBT common stock present and voting and entitled to vote at the annual
meeting. Election of the directors nominated by the NBT Board requires the
approval of a plurality of the shares of NBT common stock present and voting and
entitled to vote at the annual meeting. Approval of NBT's issuance of its common
stock to the Pioneer American stockholders in the merger and ratification of the
merger agreement and completion of the merger require, among other things,
approval by the holders of a majority of the shares of NBT common stock present
and voting and entitled to vote at the NBT annual meeting.
As of December 31, 1999, directors and executive officers of NBT and
their affiliates were the beneficial owners of approximately 5.96% of the
outstanding shares of NBT common stock, and a total of 13,097,996 shares of NBT
common stock were eligible to be voted at the NBT annual meeting. These
directors and executive officers have indicated their intention to vote their
shares of NBT common stock in favor of the election of the directors nominated
by the NBT
16
<PAGE>
Board, ratification of the NBT Board's selection of the independent auditor,
and the issuance of the NBT common stock in the merger and ratification of the
merger agreement.
Pioneer American. Pioneer American will hold its special meeting of stockholders
at Heart Lake Lodge, 1299 Heart Lake Road, Jermyn, Pennsylvania on April 25,
2000 at 10:00 a.m. local time. At the Pioneer American special meeting, Pioneer
American stockholders will vote upon a proposal to approve the merger agreement,
the merger and the other matters contemplated by the merger agreement.
Only holders of record of Pioneer American common stock at the close of
business on , 2000, which is the record date for the Pioneer American special
meeting, will be entitled to vote at the Pioneer American special meeting and
any adjournments or postponements of the meeting. You can cast one vote for each
share of Pioneer American common stock that you owned on the record date.
Approval of the merger agreement and completion of the merger require,
among other things, approval by the holders of seventy percent of the
outstanding shares of Pioneer American common stock entitled to vote.
As of December 31, 1999, directors and executive officers of Pioneer
American and their affiliates were the beneficial owners of approximately 16.84%
of the outstanding shares of Pioneer American common stock, and a total of
2,864,307 shares of Pioneer American common stock were eligible to be voted at
the Pioneer American special meeting. These directors and executive officers of
Pioneer American have indicated their intention to vote their shares of Pioneer
American common stock in favor of the merger agreement.
Thirteen stockholders of Pioneer American, eleven of whom are officers
and/or directors of Pioneer American, have agreed individually that they will
vote in favor of the merger agreement and the merger all shares of Pioneer
American common stock they beneficially own and that they will use their best
efforts to cause any other shares of Pioneer American common stock over which
they share voting power to be voted in favor of the merger agreement and the
merger. The number of shares subject to these agreements aggregate 550,606
shares or approximately 19.23% of the outstanding common stock of Pioneer
American.
YOU MAY CHANGE YOUR VOTE IF YOU WISH
You may change your vote at any time before the voting of your proxy at
the stockholders' meeting. You can change your vote in any of the following
ways:
|X| You can send a written notice dated after your proxy stating
that you would like to revoke your proxy. If you are an NBT
stockholder, you should send your written notice to the Chief
Executive Officer of NBT at the address below. If you are a
Pioneer American stockholder, you should send your written
notice to the Chief Executive Officer of Pioneer American at
the address below;
|X| You can complete a new proxy card and send it to NBT or
Pioneer American, and the new proxy card will automatically
replace any earlier dated proxy card that you previously
returned; or
|X| You can attend your stockholders' meeting and vote in person.
Attending the special meeting will not by itself revoke your
proxy.
You should send any written notice of revocation, request for a new
proxy card or a completed new proxy card to NBT Bancorp Inc. at 52 South Broad
Street, Norwich, New York 13815, Attention: Chief Executive Officer, if you are
an NBT stockholder; or Pioneer American Holding Company Corp. at 41 North Main
Street, Carbondale, Pennsylvania 18407, Attention: Chief Executive Officer, if
you are a Pioneer American stockholder.
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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 Pioneer American Stockholders:
NBT Bancorp Inc. Pioneer American Holding Company Corp.
52 South Broad Street 41 North Main Street
Norwich, New York 13815 Carbondale, Pennsylvania 18407
Attention: Michael J. Chewens, CPA Attention: Patricia A. Cobb, Esq.
Phone Number: (607) 337-6520 Phone Number: (570) 282-8045
18
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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 Pioneer American, and selected unaudited pro forma combined financial
data for the combined company. The selected unaudited pro forma combined
financial data for the combined company include financial data for Lake Ariel
Bancorp, Inc. We have derived the selected historical financial data from
consolidated financial statements of NBT and Pioneer American, which statements
we have incorporated by reference into this document. Stockholders of each of
NBT and Pioneer American should read this information in conjunction with the
historical financial statements and related notes of each of NBT and Pioneer
American and the unaudited pro forma consolidated financial statements and
related notes of NBT presented on pages 110 through 126. The NBT and Pioneer
American combined results of operations give effect to NBT's proposed
acquisition of Pioneer American as a pooling of interests, as if such
transaction had been completed as of the beginning of each of the periods
presented.
The pro forma information does not reflect estimated non-recurring
charges that will be incurred in connection with the mergers. The combined
company expects to achieve certain merger benefits in the form of operating
expense reductions and revenue enhancements. The pro forma information does not
reflect potential operating expense reductions or revenue enhancements that are
expected to result from the merger, and therefore may not be indicative of the
results of future operations. No assurance can be given with respect to the
ultimate level of operating expense reductions or revenue enhancements.
Accordingly, the unaudited selected pro forma 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.
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<TABLE>
<CAPTION>
NBT BANCORP INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data) SEPT. 30, 1999 SEPT. 30, 1998 1998 1997 1996
-------------- -------------- ---- ---- ----
<S> <C> <C> <C> <C> <C>
FOR PERIOD ENDED
Interest and fee income $ 75,369 $ 75,980 $ 101,080 $ 96,181 $ 84,387
Interest expense 30,324 33,274 43,677 42,522 36,365
Net interest income 45,045 42,706 57,403 53,659 48,022
Provision for loan losses 2,925 3,550 4,599 3,505 3,175
Noninterest income excluding securities gains (losses) 7,699 7,015 9,355 8,403 7,683
Securities gains (losses) 1,507 613 624 (337) 1,179
Noninterest expense 27,940 28,648 39,128 35,170 34,422
Income before income taxes 23,386 18,136 23,655 23,050 19,287
Net income 14,356 14,513 19,102 14,749 12,179
PER COMMON SHARE*
Basic earnings $ 1.10 $ 1.10 $ 1.45 $ 1.12 $ 0.93
Diluted earnings $ 1.09 $ 1.07 $ 1.42 $ 1.11 $ 0.93
Cash dividends paid $ 0.486 $ 0.425 $ 0.587 $ 0.421 $ 0.338
Stock dividends distributed --% --% 5% 5% 5%
Book value at period-end $ 9.80 $ 10.08 $ 10.02 $ 9.30 $ 8.24
Tangible book value at period-end $ 9.28 $ 9.49 $ 9.44 $ 8.66 $ 7.47
Average common shares outstanding 13,022 13,241 13,198 13,176 13,058
Average diluted common shares outstanding 13,165 13,509 13,474 13,335 13,140
PERIOD ENDED
Assets available for sale $ 358,648 $ 395,836 $ 358,645 $ 443,918 $ 373,337
Securities held to maturity 41,216 36,203 35,095 36,139 42,239
Loans 898,668 797,604 821,505 735,482 654,593
Allowance for loan losses 13,555 12,611 12,962 11,582 10,473
Assets 1,378,259 1,302,943 1,290,009 1,280,585 1,138,986
Deposits 1,094,473 1,033,107 1,044,205 1,014,183 916,319
Short-term borrowings 113,163 120,215 96,589 134,527 88,244
Long-term debt 35,161 10,174 10,171 183 20,195
Stockholders' equity 127,879 132,506 130,632 123,343 106,264
AVERAGE BALANCES
Assets $ 1,317,448 $ 1,285,576 $1,288,334 $ 1,228,643 $1,110,968
Earning assets 1,255,445 1,221,737 1,223,635 1,167,460 1,043,425
Loans 858,937 762,338 774,640 695,552 617,810
Deposits 1,043,439 1,031,842 1,029,817 973,641 916,683
Stockholders' equity 129,045 126,805 127,937 113,691 103,240
KEY RATIOS
Return on average assets 1.46% 1.51% 1.48% 1.20% 1.10%
Return on average equity 14.87% 15.30% 14.93% 12.97% 11.80%
Average equity to average assets 9.80% 9.86% 9.93% 9.25% 9.29%
Net interest margin 4.88% 4.74% 4.76% 4.67% 4.69%
Efficiency 53.22% 56.92% 57.92% 56.09% 60.74%
Cash dividend per share payout 44.74% 39.72% 41.34% 37.91% 36.50%
Tier 1 leverage 9.37% 9.36% 9.33% 8.91% 8.70%
Tier 1 risk-based capital 14.39% 14.95% 14.69% 14.88% 14.06%
Total risk-based capital 15.64% 16.21% 15.94% 16.13% 15.31%
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NBT BANCORP INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data) 1995 1994
---- ----
<S> <C> <C>
FOR PERIOD ENDED
Interest and fee income $ 77,400 $ 70,438
Interest expense 34,840 25,742
Net interest income 42,560 44,696
Provision for loan losses 1,553 3,071
Noninterest income excluding securities gains (losses) 6,957 6,484
Securities gains (losses) 145 555
Noninterest expense 33,024 38,674
Income before income taxes 15,085 9,990
Net income 9,329 6,508
PER COMMON SHARE*
Basic earnings $ 0.69 $ 0.48
Diluted earnings $ 0.69 $ 0.47
Cash dividends paid $ 0.292 $ 0.264
Stock dividends distributed 5% 5%
Book value at period-end $ 8.07 $ 7.20
Tangible book value at period-end $ 7.20 $ 6.49
Average common shares outstanding 13,520 13,642
Average diluted common shares outstanding 13,582 13,797
PERIOD ENDED
Assets available for sale $ 399,625 $ 119,398
Securities held to maturity 40,311 272,466
Loans 588,385 574,718
Allowance for loan losses 9,120 9,026
Assets 1,106,266 1,044,557
Deposits 873,032 791,443
Short-term borrowings 115,945 140,587
Long-term debt 3,012 8,734
Stockholders' equity 108,044 98,307
AVERAGE BALANCES
Assets $1,042,198 $1,009,572
Earning assets 977,738 942,989
Loans 575,736 565,841
Deposits 848,289 817,401
Stockholders' equity 101,630 99,710
KEY RATIOS
Return on average assets 0.90% 0.64%
Return on average equity 9.18% 6.53%
Average equity to average assets 9.75% 9.88%
Net interest margin 4.43% 4.81%
Efficiency 65.92% 70.22%
Cash dividend per share payout 42.61% 56.13%
Tier 1 leverage 8.80% 9.05%
Tier 1 risk-based capital 15.21% 16.09%
Total risk-based capital 16.46% 17.35%
<FN>
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
</FN>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
PIONEER AMERICAN HOLDING COMPANY CORP.
SELECTED FINANCIAL DATA
(in thousands, except per share data) SEPT. 30, 1999 SEPT. 30, 1998 1998 1997 1996
-------------- -------------- ---- ---- ----
<S> <C> <C> <C> <C> <C>
FOR PERIOD ENDED
Interest and fee income $ 21,950 $ 21,182 $ 28,302 $ 26,507 $ 24,358
Interest expense 11,164 10,615 14,319 12,845 10,874
Net interest income 10,786 10,567 13,983 13,662 13,484
Provision for loan losses 280 450 420 535 500
Noninterest income excluding securities gains (losses) 2,028 1,792 2,450 2,304 2,012
Securities gains (losses) 88 298 511 157 -
Noninterest expense 8,456 8,130 10,967 10,080 9,749
Income before income taxes 4,166 4,077 5,557 5,508 5,247
Net income 3,056 2,968 4,022 4,008 3,704
PER COMMON SHARE*
Basic earnings $ 1.05 $ 1.03 $ 1.39 $ 1.41 $ 1.32
Diluted earnings $ 1.04 $ 1.01 $ 1.36 $ 1.36 $ 1.26
Cash dividends paid $ 0.600 $ 0.570 $ 0.770 $ 0.720 $ 0.660
Stock dividends distributed -- -- -- -- --
Book value at period-end $ 10.87 $ 12.15 $ 12.21 $ 11.67 $ 10.70
Tangible book value at period-end $ 10.68 $ 11.95 $ 12.01 $ 11.45 $ 10.46
Average common shares outstanding 2,914 2,890 2,894 2,850 2,812
Average diluted common shares outstanding 2,942 2,953 2,953 2,939 2,932
PERIOD ENDED
Assets available for sale $ 115,547 $ 86,087 $ 101,079 $ 96,696 $ 76,019
Securities held to maturity 37,444 50,429 46,178 37,379 20,860
Loans 240,566 225,583 225,735 212,342 204,048
Allowance for loan losses 3,000 3,037 2,909 2,759 2,750
Assets 421,854 403,074 405,157 370,126 330,213
Deposits 304,632 303,300 307,360 293,643 295,946
Short-term borrowings -- -- -- 2,350 --
Long-term debt 80,409 59,308 58,357 37,073 275
Stockholders' equity 31,906 35,301 35,466 33,398 30,263
AVERAGE BALANCES
Assets $ 423,585 $ 390,083 $ 394,312 $ 358,608 $ 326,494
Earning assets 396,055 363,728 367,205 332,618 301,788
Loans 234,100 217,631 221,484 205,731 207,030
Deposits 307,050 292,290 296,285 298,844 291,883
Stockholders' equity 34,977 33,689 33,877 31,379 29,017
KEY RATIOS
Return on average assets 0.96% 1.02% 1.02% 1.12% 1.13%
Return on average equity 11.68% 11.78% 11.87% 12.77% 12.76%
Average equity to average assets 8.26% 8.64% 8.59% 8.75% 8.89%
Net interest margin 3.80% 4.04% 3.96% 4.27% 4.59%
Efficiency 63.66% 63.65% 64.54% 61.04% 61.40%
Cash dividend per share payout 57.69% 56.44% 56.62% 52.94% 52.38%
Tier 1 leverage 7.97% 8.53% 8.41% 8.57% 8.96%
Tier 1 risk-based capital 14.40% 15.24% 15.35% 15.80% 15.28%
Total risk-based capital 15.65% 16.49% 16.60% 17.05% 16.53%
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
PIONEER AMERICAN HOLDING COMPANY CORP.
SELECTED FINANCIAL DATA
(in thousands, except per share data) 1995 1994
---- ----
<S> <C> <C>
Interest and fee income $ 23,662 $ 20,626
Interest expense 11,227 8,157
Net interest income 12,435 12,469
Provision for loan losses 420 310
Noninterest income excluding securities gains (losses) 1,448 1,290
Securities gains (losses) 465 29
Noninterest expense 9,075 8,697
Income before income taxes 4,853 4,781
Net income 3,483 3,448
PER COMMON SHARE*
Basic earnings $ 1.25 $ 1.24
Diluted earnings $ 1.20 $ 1.19
Cash dividends paid $ 0.600 $ 0.580
Stock dividends distributed -- --
Book value at period-end $ 10.23 $ 9.00
Tangible book value at period-end $ 9.97 $ 8.73
Average common shares outstanding 2,783 2,771
Average diluted common shares outstanding 2,906 2,892
PERIOD ENDED
Assets available for sale $ 68,328 $ 50,467
Securities held to maturity 26,033 52,915
Loans 197,297 179,872
Allowance for loan losses 2,742 2,699
Assets 320,647 302,408
Deposits 288,252 270,718
Short-term borrowings -- 3,150
Long-term debt 275 275
Stockholders' equity 28,492 24,978
AVERAGE BALANCES
Assets $ 315,387 $ 283,208
Earning assets 293,109 263,805
Loans 188,816 168,157
Deposits 282,154 254,557
Stockholders' equity 27,024 25,188
KEY RATIOS
Return on average assets 1.10% 1.22%
Return on average equity 12.89% 13.69%
Average equity to average assets 8.57% 8.89%
Net interest margin 4.39% 4.89%
Efficiency 63.40% 61.25%
Cash dividend per share payout 50.00% 48.74%
Tier 1 leverage 8.75% 8.26%
Tier 1 risk-based capital 15.57% 15.63%
Total risk-based capital 16.82% 16.88%
<FN>
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
</FN>
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED
SELECTED FINANCIAL DATA
(in thousands, except per share data) SEPT. 30, 1999 SEPT. 30, 1998 1998 1997
-------------- -------------- ---- ----
<S> <C> <C> <C> <C>
FOR PERIOD ENDED
Interest and fee income $ 121,428 $ 118,854 $ 158,602 $ 147,338
Interest expense 55,193 56,248 74,736 68,892
Net interest income 66,235 62,606 83,866 78,446
Provision for loan losses 3,860 4,490 6,149 4,820
Noninterest income excluding securities gains (losses) 13,104 11,960 16,307 13,894
Securities gains (losses) 1,803 991 1,567 34
Noninterest expense 45,750 44,816 61,547 54,460
Income before income taxes 31,532 26,251 34,044 33,094
Net income 20,437 20,589 26,895 22,188
PER COMMON SHARE*
Basic earnings $ 0.88 $ 0.89 $ 1.16 $ 1.00
Diluted earnings $ 0.87 $ 0.87 $ 1.14 $ 0.98
Cash dividends paid $ 0.486 $ 0.425 $ 0.587 $ 0.421
Stock dividends distributed 0% 0% 5% 5%
Book value at period-end $ 8.39 $ 8.89 $ 8.84 $ 8.31
Tangible book value at period-end $ 7.96 $ 8.41 $ 8.36 $ 7.87
Average common shares outstanding 23,104 23,230 23,199 22,239
Average diluted common shares outstanding 23,427 23,730 23,691 22,698
PERIOD ENDED
Assets available for sale $ 648,073 $ 551,822 $ 543,025 $ 597,780
Securities held to maturity 125,957 191,103 193,099 131,763
Loans 1,420,102 1,238,621 1,271,644 1,157,548
Allowance for loan losses 19,101 17,619 18,231 16,450
Assets 2,353,030 2,150,723 2,169,855 2,018,784
Deposits 1,741,139 1,639,258 1,664,307 1,588,276
Short-term borrowings 145,777 122,342 99,872 137,077
Long-term debt 253,774 165,670 183,987 84,912
Stockholders' equity 194,593 206,100 204,038 192,556
AVERAGE BALANCES
Assets $ 2,236,970 $ 2,093,419 $ 2,111,855 $ 1,931,317
Earning assets 2,100,865 1,965,226 1,979,883 1,813,157
Loans 1,338,368 1,195,431 1,214,753 1,095,347
Deposits 1,672,610 1,605,827 1,614,766 1,540,597
Stockholders' equity 200,537 197,002 198,538 167,585
KEY RATIOS
Return on average assets 1.22% 1.31% 1.27% 1.15%
Return on average equity 13.63% 13.97% 13.55% 13.24%
Average equity to average assets 8.96% 9.41% 9.40% 8.68%
Net interest margin 4.35% 4.37% 4.35% 4.45%
Efficiency 56.83% 59.04% 60.45% 57.73%
Cash dividend per share payout 55.86% 48.85% 51.49% 42.96%
Tier 1 leverage 8.64% 9.03% 8.81% 9.08%
Tier 1 risk-based capital 13.95% 14.93% 14.68% 15.44%
Total risk-based capital 15.11% 16.10% 15.87% 16.64%
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED
SELECTED FINANCIAL DATA
(in thousands, except per share data) 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
FOR PERIOD ENDED
Interest and fee income $ 129,020 $ 119,610 $ 105,221
Interest expense 57,422 55,581 39,866
Net interest income 71,598 64,029 65,355
Provision for loan losses 4,325 2,783 3,756
Noninterest income excluding securities gains (losses) 12,358 10,555 9,341
Securities gains (losses) 1,222 941 696
Noninterest expense 52,168 49,862 54,202
Income before income taxes 28,685 22,880 17,434
Net income 18,914 15,119 12,084
PER COMMON SHARE*
Basic earnings $ 0.86 $ 0.68 $ 0.54
Diluted earnings $ 0.85 $ 0.67 $ 0.53
Cash dividends paid $ 0.338 $ 0.292 $ 0.264
Stock dividends distributed 5% 5% 5%
Book value at period-end $ 7.21 $ 7.07 $ 6.25
Tangible book value at period-end $ 6.69 $ 6.50 $ 5.76
Average common shares outstanding 21,979 22,353 22,404
Average diluted common shares outstanding 22,287 22,636 22,778
PERIOD ENDED
Assets available for sale $ 510,070 $ 521,938 $ 204,126
Securities held to maturity 89,700 88,933 367,916
Loans 1,036,146 936,240 890,985
Allowance for loan losses 15,053 13,519 13,221
Assets 1,767,105 1,678,772 1,583,090
Deposits 1,465,461 1,370,043 1,254,348
Short-term borrowings 88,544 121,345 154,487
Long-term debt 40,493 18,443 24,228
Stockholders' equity 157,699 156,045 139,084
AVERAGE BALANCES
Assets $ 1,714,416 $1,608,687 $ 1,496,457
Earning assets 1,599,126 1,500,520 1,392,711
Loans 990,188 910,335 856,580
Deposits 1,442,041 1,337,734 1,241,684
Stockholders' equity 152,499 146,166 141,177
KEY RATIOS
Return on average assets 1.10% 0.94% 0.81%
Return on average equity 12.40% 10.34% 8.56%
Average equity to average assets 8.90% 9.09% 9.43%
Net interest margin 4.60% 4.38% 4.81%
Efficiency 60.75% 65.31% 67.99%
Cash dividend per share payout 39.76% 43.58% 49.81%
Tier 1 leverage 8.55% 8.61% 8.82%
Tier 1 risk-based capital 13.90% 14.89% 15.44%
Total risk-based capital 15.11% 16.11% 16.66%
<FN>
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
</FN>
</TABLE>
25
<PAGE>
UNAUDITED COMPARATIVE PER SHARE DATA
We have summarized below the per common share combined information for
NBT and Pioneer American on an historical and pro forma combined and pro forma
equivalent basis. The pro forma combined company information includes financial
data for Lake Ariel Bancorp, Inc. The pro forma information gives effect to the
merger accounted for as a pooling of interests, on the assumption that our
companies had always been combined for accounting and financial reporting
purposes. In presenting the pro forma information for the time periods shown in
the table, we assumed that we had been merged throughout those periods. You
should read this information in conjunction with our historical financial
statements and related notes contained in the reports and other information that
we have filed with the SEC. See "Where You Can Find More Information." You
should also read this information in conjunction with the pro forma combined
financial information set forth under the heading "Unaudited Pro Forma Combined
Financial Statements." You should not rely on the pro forma information as being
indicative of the results that we will achieve after the merger.
The combined company unaudited pro forma data represent the effect of
the merger on a share of NBT common stock. The Pioneer American pro forma
equivalent data represent the combined company pro forma data before rounding,
multiplied by the conversion ratio of 1.805 shares of NBT common stock for each
share of Pioneer American common stock, and thereby reflect the effect of the
merger on a share of Pioneer American common stock.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------------- ----------------------------
NBT PIONEER COMBINED PIONEER
BANCORP AMERICAN COMPANY AMERICAN
EQUIVALENT
<S> <C> <C> <C> <C>
Per Common Share
BASIC EARNINGS
For the nine months ended September 30, 1999 $ 1.10 $ 1.05 $ 0.88 $ 1.59
Year - Ended:
December 31, 1998 1.45 1.39 1.16 2.09
December 31, 1997 1.12 1.41 1.00 1.81
December 31, 1996 0.93 1.32 0.86 1.55
DILUTED EARNINGS
For the nine months ended September 30, 1999 $ 1.09 $ 1.04 $ 0.87 $ 1.57
Year - Ended:
December 31, 1998 1.42 1.36 1.14 2.06
December 31, 1997 1.11 1.36 0.98 1.77
December 31, 1996 0.93 1.26 0.85 1.53
CASH DIVIDEND PAID
For the nine months ended September 30, 1999 $ 0.486 $ 0.600 $ 0.486 $ 0.877
Year - Ended:
December 31, 1998 0.587 0.770 0.587 1.060
December 31, 1997 0.421 0.720 0.421 0.760
December 31, 1996 0.338 0.660 0.338 0.610
BOOK VALUE
As of:
September 30, 1999 $ 9.80 $ 10.87 $ 8.39 $ 15.14
December 31, 1998 10.02 12.21 8.84 15.96
TANGIBLE BOOK VALUE
As of:
September 30, 1999 $ 9.28 $ 10.68 $ 7.96 $ 14.37
December 31, 1998 9.44 12.01 8.36 15.09
</TABLE>
26
<PAGE>
THE STOCKHOLDERS' MEETINGS
THE NBT ANNUAL MEETING
WHEN AND WHERE THE NBT ANNUAL MEETING WILL BE HELD
NBT will hold an annual meeting of stockholders at the Binghamton
Regency Hotel and Conference Center, 225 Water Street, One Sarbro Square,
Binghamton, New York on April 25, 2000, at 10:00 a.m. local time.
WHAT WILL BE VOTED ON AT THE NBT ANNUAL MEETING
|X| In connection with the election of directors, to fix the
number of directors at twelve and elect the candidates listed
as nominees in the joint proxy statement/prospectus.
|X| To ratify the NBT Board's action in selecting KPMG LLP as
NBT's independent auditor for the year 2000.
|X| To consider and vote upon the issuance of NBT common stock in
the merger and ratification of the merger agreement, which
will approve the merger and related actions, including the
issuance of approximately 5.2 million shares of NBT common
stock to the holders of Pioneer American common stock upon
completion of the merger.
|X| To transact such other business as may properly come before
the NBT annual meeting.
We may take action on the above matters at the NBT annual meeting on
April 25, 2000, or on any later date to which the annual meeting is postponed or
adjourned.
The NBT Board is unaware of other matters to be voted on at the NBT
annual meeting. If other matters do properly come before the NBT annual meeting,
including consideration of a motion to adjourn the annual meeting to another
time and/or place for such 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 form. The named
agents will not vote any proxy voted against approval of the merger agreement in
favor of any adjournment or postponement of the NBT annual meeting for the
purpose of soliciting additional proxies.
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 annual 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 annual
meeting. As of December 31, 1999, there were 13,097,996 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. NBT's Certificate of Incorporation does not permit stockholders
to cumulate their votes in the election of directors.
VOTE REQUIRED TO APPROVE THE PROPOSALS
The affirmative vote, either in person or by proxy, of a majority of
the NBT shares represented and voting and entitled to vote at the annual meeting
is required to:
|X| ratify the NBT Board's selection of NBT's independent auditor;
27
<PAGE>
|X| issue NBT common stock in the merger;
|X| ratify the merger agreement and related matters; and
|X| set the number of directors at twelve.
The affirmative vote, either in person or by proxy, of a plurality of
the shares of NBT common stock represented and voting and entitled to vote is
required to:
|X| elect the NBT nominees for director.
Abstentions on any proposal will effectively count as votes against
that proposal. Broker non-votes will not affect the vote on any of the proposals
to be presented at the NBT annual meeting. Accordingly, the NBT Board urges NBT
stockholders to complete, date and sign the accompanying proxy and return it
promptly in the enclosed postage-paid envelope.
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 NBT's common stock entitled to vote at the NBT annual
meeting must be represented in person or by proxy.
VOTING YOUR SHARES
The NBT Board is soliciting proxies from NBT stockholders. This will
give you an opportunity to vote at the NBT annual meeting. 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 vote by proxy or attend
the annual meeting and vote in person, your votes will be counted as not present
for quorum purposes but otherwise will have no effect upon the proposals
presented at the annual meeting. If you vote by proxy but make no specification
on your proxy card that you have otherwise properly executed, the named agent
will vote
|X| FOR fixing the number of directors at twelve and electing the
persons nominated by the NBT Board as directors,
|X| FOR ratification of the NBT Board's selection of KPMG LLP as
NBT's independent auditor for 2000, and
|X| FOR approval of the issuance of NBT common stock in the merger
and ratification of the merger agreement and 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.
In person. If you attend the NBT annual meeting in person, you may vote
your shares by completing a ballot at the meeting.
HOW PROXIES ARE COUNTED
We will count as present at the NBT annual meeting for purposes of
determining the presence or absence of a quorum for the transaction of business
at the NBT annual meeting
28
<PAGE>
|X| those shares of NBT common stock held by persons attending the
NBT annual meeting but not voting, and
|X| those shares of NBT common stock for which NBT has received
proxies but with respect to which holders of those shares have
abstained from voting.
Nasdaq rules prohibit brokers who hold shares of NBT common stock in
nominee or "street name" for customers who are the beneficial owners of those
shares from giving a proxy to vote shares held for those customers on all the
matters to be considered and voted upon at the NBT annual meeting other than
election of directors without specific instructions from those customers. We
will count these so-called "broker non-votes," which we receive, for purposes of
determining whether a quorum exists.
CHANGING YOUR VOTE
Any NBT stockholder giving a proxy may revoke the proxy at any time
before the vote at the annual meeting in one or more of the following ways:
|X| delivering a written notice to the Chief Executive Officer of
NBT bearing a later date than the proxy;
|X| granting a later-dated proxy; or
|X| appearing in person and voting at the NBT annual meeting.
Attendance at the NBT annual meeting will not by itself
constitute a revocation of a proxy, unless you complete a
ballot.
You should send any written notice of revocation or subsequent proxy to
52 South Broad Street, Norwich, New York 13815, Attention: Chief Executive
Officer, or hand deliver the notice of revocation or subsequent proxy to the
Chief Executive Officer at or before the taking of the vote at the NBT annual
meeting.
INDEPENDENT AUDITORS TO BE PRESENT AT THE ANNUAL MEETING
NBT has selected KPMG LLP as its independent auditor for the current
fiscal year. Representatives of KPMG LLP will be present at the NBT annual
meeting and will have the opportunity to make a statement if they desire to do
so. Such representatives will also 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 may solicit proxies from NBT stockholders by directors,
officers and employees acting on behalf of NBT in person or by telephone,
telegraph, facsimile or other appropriate means of communications. NBT will not
pay any additional compensation, except for reimbursement of reasonable
out-of-pocket expenses, to these directors, officers and employees of NBT in
connection with the solicitation. You may direct any questions or requests for
assistance regarding this joint proxy statement/prospectus and related proxy
materials to Michael J. Chewens, Executive Vice President 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.
RECOMMENDATIONS OF NBT BOARD
29
<PAGE>
The NBT Board has unanimously approved the fixing of the size of the
NBT Board at twelve members and the nomination of the persons named in this
joint proxy statement/prospectus for the NBT Board and selecting KPMG LLP as
NBT's independent auditor for 2000. The NBT Board believes that each proposal is
in the best interest of NBT and the NBT stockholders and recommends that the NBT
stockholders vote FOR approval of each proposal. See "Proposal 1 -- Election of
Directors" and "Proposal 2 -- Proposal to Ratify the Board of Directors Action
in Selection of KPMG LLP as NBT's Independent Auditor."
The NBT Board has unanimously approved issuance of the NBT common stock
in the merger and the merger agreement and the related matters. The NBT Board
believes that issuance of the NBT common stock in the merger and the merger
agreement and the merger are in the best interests of NBT and the NBT
stockholders, and recommends that the NBT stockholders vote FOR approval of the
issuance of the NBT common stock in the merger and ratification of the merger
agreement. See "Proposal 3 -- The Issuance of NBT Common Stock in the Merger and
Ratification of the Merger Agreement" and "The Issuance of NBT Common Stock in
the Merger and Ratification of the Merger Agreement -- Recommendation of the NBT
Board and NBT's Reasons for the Merger."
THE PIONEER AMERICAN SPECIAL MEETING
WHEN AND WHERE THE PIONEER AMERICAN SPECIAL MEETING WILL BE HELD
Pioneer American will hold a special meeting of stockholders at Heart
Lake Lodge, 1299 Heart Lake Road, Jermyn, Pennsylvania on April 25, 2000 at
10:00 a.m. local time.
WHAT WILL BE VOTED ON AT THE PIONEER AMERICAN SPECIAL MEETING
|X| To consider and approve the merger agreement, which will
approve the merger and related matters, and
|X| To transact such other business as may properly come
before the Pioneer American special meeting.
We may take action on the above matters at the Pioneer American special
meeting on April 25, 2000, or any later date to which the special meeting is
postponed or adjourned.
The Pioneer American Board is unaware of other matters to be voted on
at the Pioneer American special meeting. If other matters do properly come
before the Pioneer American 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, Pioneer American intends that the persons named
in the proxies will vote, or not vote, in their discretion the shares
represented by proxies in the accompanying form. The named agents will not vote
any proxy voted against approval of the merger agreement in favor of any
adjournment or postponement of the Pioneer American special meeting for the
purpose of soliciting additional proxies.
STOCKHOLDERS ENTITLED TO VOTE
Pioneer American has set , 2000 as the record date to determine which
Pioneer American stockholders will be entitled to vote at the Pioneer American
special meeting. Only Pioneer American stockholders at the close of business on
, 2000, will be entitled to receive notice of and to vote at the Pioneer
American special meeting. As of December 31, 1999, there were 2,864,307 issued
and outstanding shares of Pioneer American common stock. Each Pioneer American
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.
VOTE REQUIRED TO APPROVE THE MERGER
30
<PAGE>
APPROVAL OF THE MERGER AGREEMENT AND RELATED MATTERS REQUIRES THE
AFFIRMATIVE VOTE OF SEVENTY PERCENT OF THE OUTSTANDING SHARES OF PIONEER
AMERICAN COMMON STOCK ENTITLED TO VOTE AT THE PIONEER AMERICAN SPECIAL MEETING.
ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST
APPROVAL OF THE MERGER AGREEMENT AND THE RELATED MATTERS. ACCORDINGLY, THE
PIONEER AMERICAN BOARD URGES PIONEER AMERICAN STOCKHOLDERS TO COMPLETE, DATE AND
SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
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 Pioneer American's common stock entitled to vote at the
Pioneer American special meeting must be represented in person or by proxy.
VOTING YOUR SHARES
The Pioneer American Board is soliciting proxies from the Pioneer
American stockholders. This will give you an opportunity to vote at the Pioneer
American special meeting. 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 vote by proxy or attend the Pioneer American special
meeting and vote in person, it will have the same effect as voting against the
merger. 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
approval of the merger agreement and related matters.
HOW PROXIES ARE COUNTED
We will count as present at the Pioneer American meeting for purposes
of determining the presence or absence of a quorum for the transaction of
business at the Pioneer American special meeting
|X| those shares of Pioneer American common stock held by persons
attending the Pioneer American special meeting but not voting,
and
|X| shares of Pioneer American common stock for which Pioneer
American has received proxies but with respect to which
holders of those shares have abstained from voting.
Nasdaq rules prohibit brokers who hold shares of Pioneer American
common stock in nominee or "street name" for customers who are the beneficial
owners of those shares from giving a proxy to vote shares held for those
customers on the matters to be considered and voted upon at the Pioneer American
meeting without specific instructions from those customers. We will count these
so called "broker non-votes," which we receive, for purposes of determining
whether a quorum exists.
CHANGING YOUR VOTE
Any Pioneer American stockholder may revoke the proxy at any time
before the vote at the meeting in one or more of the following ways:
|X| delivering a written notice to the Chief Executive Officer of
Pioneer American bearing a later date than the proxy;
|X| granting a later-dated proxy;
|X| appearing in person and voting at the meeting. Attendance at
the Pioneer American special meeting will not by itself
constitute a revocation of a proxy, unless you complete a
ballot.
31
<PAGE>
You should send any written notice of revocation or subsequent proxy to
Pioneer American Holding Company Corp., 41 North Main Street, Carbondale,
Pennsylvania 18407, Attention: Chief Executive Officer, or hand deliver the
notice of revocation or subsequent proxy to the Chief Executive Officer of
Pioneer American at or before the taking of the vote at the Pioneer American
special meeting.
INDEPENDENT AUDITORS TO BE PRESENT AT THE SPECIAL MEETING
KPMG LLP is Pioneer American's independent auditor. Pioneer American
expects representatives of KPMG LLP to be present at the Pioneer American
special meeting and to have the opportunity to make a statement if they desire
to do so. Pioneer American also expects such representatives of KPMG LLP to be
available to respond to appropriate questions.
SOLICITATION OF PROXIES AND COSTS
Pioneer American will bear its own costs of solicitation of proxies.
Pioneer American 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 Pioneer American 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, Pioneer American may solicit from the Pioneer American
stockholders by directors, officers and employees acting on behalf of Pioneer
American in person or by telephone, telegraph, facsimile or other means of
communications. Pioneer American will not compensate such directors, officers
and employees but may reimburse them for reasonable out-of-pocket expenses in
connection with such solicitation. Further, Pioneer American has engaged
Mackenzie Partners, Inc., a solicitor and advisor, to solicit proxies from the
Pioneer American stockholders on behalf of Pioneer American in person or by
telephone, telegraph, facsimile, or other means of communications. Pioneer
American will compensate Mackenzie Partners, Inc. $5,500 and reimburse them for
reasonable out-of-pocket expenses 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 Patricia A. Cobb, Esq.,
Executive Vice President of Pioneer American, by telephone at (570) 282-8045.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO
PIONEER AMERICAN. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
RECOMMENDATION OF PIONEER AMERICAN BOARD
The Pioneer American Board has unanimously approved the merger
agreement and the related matters. The Pioneer American Board believes that the
merger agreement, the merger and related matters are in the best interests of
Pioneer American and the Pioneer American stockholders, and recommends that the
Pioneer American stockholders vote FOR approval of the merger agreement and the
related matters. See "The Issuance of NBT Common Stock in the Merger and
Ratification of the Merger Agreement -- Recommendation of the Pioneer American
Board and Pioneer American's Reasons for the Merger."
PROPOSAL 1
(ONLY STOCKHOLDERS OF NBT)
ELECTION OF DIRECTORS
The NBT bylaws provide that the number of directors authorized to serve
until the next annual meeting of stockholders shall be the number designated at
the NBT annual meeting and prior to the election of directors by the
stockholders entitled to vote for the election of directors at that meeting. The
NBT Board has proposed and is requesting the NBT stockholders to approve its
proposal that the number of directors be set at twelve. The NBT Board has
designated six persons as nominees for election at the NBT annual meeting and is
presenting these nominees to the NBT stockholders for election. The directors to
32
<PAGE>
be elected at the annual meeting shall be determined by a plurality vote of the
shares of NBT common stock represented in person or by proxy, entitled to vote
on the election of directors.
In addition, following the effective time of the merger, the NBT Board,
in accordance with the merger agreement, will expand the size of the NBT Board
from twelve to fifteen and, subject to the fiduciary duties of its directors to
NBT, will fill the vacancies so created by electing or appointing to the NBT
Board three individuals who are currently serving as directors of Pioneer
American, Messrs. Gene E. Goldenziel to serve as a director of the class whose
term expires in 2001, Richard Chojnowski to serve as a director of the class
whose term expires in 2002, and Joseph G. Nasser to serve as a director of the
class whose term expires in 2003.
Nominations of candidates for election as directors of NBT must be made
in writing and delivered to or received by the President of NBT within ten days
following the day on which public disclosure of the date of any stockholders'
meeting called for the election of directors is first given. Such notification
must contain the name and address of the proposed nominee, the principal
occupation of the proposed nominee, the number of shares of NBT common stock
that the notifying stockholder will vote for the proposed nominee, including
shares to be voted by proxy, the name and residence of the notifying
stockholder, and the number of shares of NBT common stock beneficially owned by
the notifying stockholder.
No person except Mr. Everett A. Gilmour shall be eligible for election
or re-election as a director if he or she shall have attained the age of 72.
Mr. Gilmour shall not be eligible for election or re-election as director if he
shall have attained the age of 78.
The chairman of the NBT annual meeting may disregard any nomination not
made in accordance with the procedures established by the NBT bylaws.
The NBT bylaws permit the NBT Board by a majority vote, between annual
meetings of the stockholders, to increase the number of directors by not more
than three members and to appoint qualified persons to fill the vacancies
created by the Board's actions.
The NBT bylaws provide for a classified Board of Directors. The NBT
Board is divided into three equal classes. Each class holds office for a term of
three years, but only one class comes up for election each year (except in those
cases where vacancies occur in other classes). The NBT Board is proposing as
nominees for directors the persons named below as follows:
|X| four for the three-year term expiring at the annual meeting to
be held in 2003;
|X| one for the three-year term expiring at the annual meeting to
be held in 2002;
|X| one for the three-year term expiring at the annual meeting to
be held in 2001;
and in each case until their successors are elected and qualify.
The persons named in the enclosed proxy intend to vote the shares of
NBT common stock represented by each respective proxy properly executed and
returned to NBT for such nominees for election as directors, but if the nominees
should be unable to serve, they will vote such proxies for such substitute
nominees as the NBT Board shall designate to replace such nominees. The NBT
Board currently believes that each nominee is available for election. The names
of the nominees for election for the term as shown and certain information as to
each of them are as follows:
33
<PAGE>
<TABLE>
<CAPTION>
Number of
Principal Occupation During Common Shares Percent
Date Past Five Years and Other Director Beneficially Owned of Shares
Name of Birth Directorships (a) Since on 12/31/99 (b) Outstanding
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NOMINEES WITH TERMS EXPIRING IN 2003:
Andrew S. Kowalczyk, Jr. 09/27/35 Partner - Kowalczyk, Tolles, 1994 3,721(1) *
Deery & Johnston, attorneys
Director of NBT Bank
since 1994
Dan B. Marshman 05/08/46 Partner, Marshman Farms, Inc. 1999 24,935(1) 0.20%
Directorships: 1,359(1)(b) *
North Country Insurance Co. 4,003(2) *
NBT Bank since 1995 1,203(2)(b) *
John G. Martines (i) 11/09/46 President of LA Bank and CEO 2000
Lake Ariel for more than 5 years
John C. Mitchell 05/07/50 President and CEO of 1994 10,712(1) *
I.L. Richer Co.
(agri. business)
Directorships:
Preferred Mutual Ins. Co.(c);
NBT Bank since 1993
NOMINEE WITH TERM EXPIRING IN 2002:
Bruce D. Howe (i) 11/22/31 President of Lake Ariel and 2000
Chairman of subsidiaries for
more than 5 years; President of
John T. Howe, Inc. (fuel and
heating oil company), a motel,
truck stop, and convenience
stores
NOMINEE WITH TERM EXPIRING IN 2001:
William C. Gumble (i) 12/08/37 Retired attorney-at-law; County 2000
Solicitor and District Attorney
of Pike County, PA
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2002:
J. Peter Chaplin 10/27/29 Senior Vice President (Retired) 1999 21,357(1) 0.17%
Sheffield Products/Quest Intl. 3,536(2)(b) *
Directorships:
Director of NBT Bank
since 1995
Peter B. Gregory 05/07/35 Partner, Gatehouse Antiques 1987 113,210(1) 0.91%
Director of NBT Bank 7,957(1)(b) *
since 1978 25,787(2)(b) 0.21%
Paul O. Stillman 01/15/33 Chairman of Preferred 1986 22,692(1) 0.22%
Mutual Ins. Co. (c) 724(2)(b) *
Directorships:
Preferred Mutual Ins. Co. (c);
Leatherstocking Cooperative
Ins. Co;
NBT Bank since 1977
34
<PAGE>
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2001:
Daryl R. Forsythe 08/02/43 President and CEO of NBT 1992 31,825(1) 0.26%
since January 1995; 1,436(1)(b) *
Chairman and CEO of NBT Bank 7,347(2) *
since September 1999; 1,511(2)(b) *
President and CEO of 148,818(3) 1.20%
NBT Bank from
January 1995 to September 1999;
Vice President & General
Manager of Simmonds Precision
Engine Systems, a subsidiary of BF
Goodrich Aerospace for more than 7
previous years
Directorships:
Security Mutual Life Ins. Co. of NY;
NBT Bank since 1988
Everett A. Gilmour 05/22/21 Chairman of NBT 1986 94,840(1) 0.76%
since January 1995; 5,016(2) *
Chairman of NBT Bank from 3,047(2)(b) *
January 1995 to September 1999;
Retired Chairman of NBT
for more than
5 previous years
Directorships:
Preferred Mutual Ins. Co.(c);
NBT Bank since 1962
William L. Owens 01/20/49 Managing Partner, Stafford, 1999 2,480(1) *
Trombley, Owens
& Curtin, P.C., attorneys
Directorships:
Champlain Enterprises, Inc.
Prim Hall Enterprises
Mediquest, Inc.
NBT Bank since 1995
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF NBT BANCORP INC.
OTHER THAN DIRECTORS WHO ARE OFFICERS
Number of
Present Position Common Shares Percent
Date of and Principal Beneficially Owned of Shares
Name Date of Birth Employment Position Last Five Years on 12/31/99(b) Outstanding
<S> <C> <C> <C> <C>
Michael J. Chewens 9/13/61 7/18/94 Executive Vice President, Chief 1,041(1) *
Financial Officer and Treasurer 1,117(1)(b) *
of NBT and NBT Bank since 24,362(3) 0.20%
September 1999; Senior Vice
President, Control Group,
1995-1999; Vice President
and Auditor, 1994-1995;
Senior Manager, KPMG Peat
Marwick, 1984-1994
Martin A. Dietrich 4/3/55 3/1/81 President of NBT Bank since September 6,936(1) *
1999; Executive Vice President of 5,545(1)(b) *
Retail Banking 1998 - 1999; 3,288(2) *
Senior Vice President of Retail 848(2)(b) *
Banking 1996 - 1998; 44,457(3) 0.36%
Senior Vice President and Chief 7,000(g) *
Credit Officer 1995 - 1996;
Regional Manager 1993 - 1995;
Director of Marketing 1991 - 1993
35
<PAGE>
Joe C. Minor 10/7/42 3/1/93 President of NBT Financial Services 4,760(1) *
Corp. since September 1999; Chief 2,374(1)(b) *
Financial Officer and Treasurer 43,579(3) 0.35%
of NBT 1995-1999;
Executive Vice President, Chief
Financial Officer,
Treasurer and Cashier of
NBT Bank 1995-1999;
Senior Vice President
and Controller
of NBT Bank, 1993-1995;
Owner, Public Accounting/Bank
Consulting Firm,
Charlotte, NC 1983-1993
John D. Roberts 2/16/40 2/15/65 Vice President and Secretary of 19,988(1) 0.16%
NBT since September 1995; 1,692(1)(b) *
Executive Vice President and 306(2)(b) *
Chief Trust Officer of NBT Bank 39,125(3) 0.31%
since 1998;
Senior Vice President and
Chief Trust Officer of NBT Bank
1995-1998;
Executive Vice President
Chenango Mutual Insurance Co.
1989 to 1995
</TABLE>
All directors and executive officers as a group beneficially owned
741,711 shares as of December 31, 1999, which represented 5.96% of total shares
outstanding, including shares owned by spouses and minor children, as to which
beneficial ownership is disclaimed, and options exercisable within sixty days.
NOTES:
(a) The business experience of each director during the past five years was
that typical to a person engaged in the principal occupation listed for
each.
(b) The information under this caption regarding ownership of securities is
based upon statements by the individual nominees, directors, and
officers and includes shares held in the names of spouses and minor
children as to which beneficial ownership is disclaimed. These
indirectly held shares total in number 58,440 for the spouses and for
minor children. In the case of officers and officer directors, shares
of NBT's stock held in NBT Bank, National Association Employee Stock
Ownership Plan as of December 31, 1999, are included.
(c) Preferred Mutual Insurance Company, of which Paul O. Stillman is
Chairman and Director, and Everett A. Gilmour and John C. Mitchell are
Directors, owns 128,041 shares; Messrs. Stillman, Gilmour, and
Mitchell disclaim any beneficial ownership of any such shares.
(d) The North Country Insurance Company of which Mr. Marshman is a director
owns 18,516 shares. Mr. Marshman disclaims any beneficial ownership of
any such shares.
(e) The Everett & Pearl Gilmour Foundation, of which Everett Gilmour is a
Director, owns 10,288 shares. Mr. Gilmour disclaims any beneficial
ownership of any such shares.
(f) The Phyllis A. & Daryl R. Forsythe Foundation, of which Daryl R.
Forsythe is a Director, owns 7,180 shares. Mr. Forsythe disclaims any
beneficial ownership of any such shares.
(g) Mr. Dietrich has power of attorney for his mother, who owns 7,000
shares. Mr. Dietrich disclaims any beneficial ownership of any such
shares.
(h) Mr. Mitchell is co-trustee for the trust u/w of I Richer Mitchell,
which owns 17,158 shares. Mr. Mitchell disclaims any beneficial
ownership of any such shares.
(i) Following the merger of NBT and Lake Ariel, the NBT Board appointed
Messrs. Martines, Howe and Gumble as Directors of NBT to serve until
the next annual meeting of stockholders of NBT. The date with respect
to their respective ownership of NBT stock is February 29, 2000.
(1) Sole voting and investment authority.
(2) Shared voting and investment authority.
(3) Shares under option from NBT Bancorp Inc. Stock Option Plan which are
exercisable within sixty days of December 31, 1999.
* Less than .1%
The NBT Board unanimously recommends the NBT stockholders to vote FOR
fixing the number of directors at twelve and electing the nominees selected by
the NBT Board and named in the preceding table. The named agents will vote the
proxies FOR fixing the size of the NBT Board and FOR the named nominees for
director unless stockholders specify otherwise in their proxies.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1999, there were seven meetings of the NBT Board. Each member
attended at least 75% of the meetings of the Board and those committees on which
he served. The full Board performed the duties of the Executive Committee. The
following committees perform a dual role for NBT and NBT Bank.
36
<PAGE>
NOMINATING, ORGANIZATION AND BOARD AFFAIRS COMMITTEE:
Chairman: Daryl R. Forsythe
Members: Andrew S. Kowalczyk, Jr.
Dr. Peter B. Gregory
Everett A. Gilmour
J. Peter Chaplin
Paul O. Stillman
Martin A. Dietrich
This committee, which met three times during 1999, nominates directors
for election for NBT and NBT Bank. The committee also functions to insure a
successful evolution of management at the senior level.
COMPENSATION AND BENEFITS COMMITTEE:
Chairman: Andrew S. Kowalczyk, Jr.
Members: Everett A. Gilmour
Dr. Peter B. Gregory
John C. Mitchell
Richard F. Monroe
Paul O. Stillman
William L. Owens
This committee has the responsibility of reviewing the salaries and
other forms of compensation of the key executive personnel of NBT and NBT Bank.
The committee met three times in 1999. The committee administers the NBT stock
option plan.
AUDIT, COMPLIANCE AND LOAN REVIEW COMMITTEE:
Chairman: Dan B. Marshman
Members: J. Peter Chaplin
Everett A. Gilmour
Janet H. Ingraham
John C. Mitchell
Plus 2 rotating members each year
The Audit, Compliance and Loan Review Committee represents the NBT
Board in fulfilling its statutory and fiduciary responsibilities for independent
examinations of NBT including monitoring accounting and financial reporting
practices and financial information distributed to stockholders and the general
public. Further, the committee determines that NBT operates within prescribed
procedures in accordance with adequate administrative, operating and internal
accounting controls. It also makes recommendations to the NBT Board with respect
to the appointment of independent auditors for the following year. This
committee met four times in 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
NBT Directors and Executive Officers must, under Section 16(a) of the
Securities Exchange Act of 1934, file certain reports of changes in beneficial
ownership of NBT securities. NBT Bank endeavors to assist Directors and
Executive Officers in filing the required reports. To NBT's knowledge all filing
requirements under the Securities Exchange Act were satisfied.
COMPENSATION OF DIRECTORS AND OFFICERS
BOARD OF DIRECTORS FEES
For 1999, members of the NBT Board received a $3,000 annual retainer in
the form of restricted stock and $600 per Board meeting attended. NBT Board
members also received $600 for each committee meeting attended. Chairmen of the
committees received $900 for each committee meeting attended. Officers of NBT,
who are also Directors, do not receive any fees. For 2000, members of the NBT
37
<PAGE>
Board will continue to receive an annual retainer in the amount of $3,000 which
will be payable in the form of restricted stock which will vest over a three
year period.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the chief
executive officer of NBT and the four most highly compensated executive
officers, other than the chief executive officer, of NBT or NBT Bank who were
serving as executive officers at the end of 1999 and whose total annual salary
and bonus exceeded $100,000 in 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
Securities
Name and Other Annual LTIP Underlying All Other
Principal Position Year Salary Bonus(1) Compensation(2) Payouts Options (3) Compensation(4)
<S> <C> <C> <C> <C> <C> <C> <C>
Daryl R. Forsythe, 1999 $300,000 $200,000 $-0- 46,935 $312,780
President and Chief 1998 311,539 195,000 -0- 39,339 28,337
Executive Officer of 1997 280,000 168,000 -0- 45,863 31,798
NBT
Joe C. Minor, 1999 197,961 155,000 -0- 16,485 171,244
President and Chief 1998 168,461 68,000 -0- 13,719 14,400
Operating Officer 1997 125,000 55,400 -0- 12,789 14,400
of NBT Financial
Services Corp.
Michael J. Chewens, (5) 1999 113,846 65,000 -0- 9,660 112,508
Executive Vice President, 1998 98,236 40,000 -0- 9,261 12,000
Chief Financial Officer 1997 86,538 35,540 -0- 8,952 8,727
and Treasurer of NBT
and NBT Bank
Martin A. Dietrich, 1999 184,231 155,000 -0- 15,540 15,009
President and Chief 1998 137,693 63,744 -0- 12,039 14,400
Operating Officer 1997 110,000 49,000 -0- 11,318 12,992
of NBT Bank
John D. Roberts, 1999 150,000 69,600 -0- 14,595 14,400
Executive Vice President 1998 128,846 59,400 -0- 11,340 14,400
Chief Trust Officer of 1997 103,000 45,000 -0- 10,584 12,164
NBT Bank and Vice
President and Secretary
of NBT
</TABLE>
NOTES:
(1) Represents bonuses under NBT's Executive Incentive Compensation Plan
earned in the specified year and paid in January of the following year.
(2) Individual amounts, and in the aggregate, are immaterial.
(3) Number of common stock option grants adjusted for the 5% stock
dividends in December 1997, 1998, 1999, and the 33 1/3% stock
dividend in 1998.
(4) In 1999, 1998 and 1997 NBT Bank contributed $487,384, $478,473 and
$424,302, respectively, to NBT Bank's Employees' Stock Ownership Plan
("ESOP"). With the 1999 contribution, NBT Bank as trustee of the ESOP
will purchase shares of NBT common stock at the fair market value on
the dates of purchase and will allocate these shares to the accounts of
the participants. The amount shown includes the amount allocated to the
named executive. An individual's maximum compensation eligible for the
ESOP contribution is $160,000. Includes payments by NBT with respect to
the death benefits agreement ($888 for Mr. Forsythe), disability
agreement ($7,734 for Mr. Forsythe), and matching contributions by NBT
or NBT Bank pursuant to NBT's and NBT Bank's Section 401(k) retirement
plan in the amount of $8,000, ESOP contribution of $6,400. Includes the
value of personal share of autos of $5,980, $596, and $609 for Messrs.
Forsythe, Minor and Dietrich, respectively. ESOP contributions of
$6,400, $6,400, $6,154 and $6,400 and 401(k) matching contributions of
$8,000, $8,000, $7,692 and $8,000 were made for Messrs. Minor,
Dietrich, Chewens and Roberts respectively. Options exercised during
the year had total values realized of $283,778, $156,248 and $63,114
for Messrs. Forsythe, Minor and Chewens, respectively. Moving costs of
$35,348 were paid for Mr. Chewens.
(5) Became an executive officer on September 1, 1999. Prior to that date,
Mr. Chewens served as Senior Vice President of the Control Group
Division, which encompasses the Audit, Compliance, Loan Review and
Legal Disclosure Departments of NBT.
38
<PAGE>
OPTION GRANTS INFORMATION
The following table presents information concerning grants of
stock options made during 1999 to each of the executive officers named
in the Summary Compensation Table above. All information has been
adjusted for the December 1999 stock dividend. No gain to the optionees
is possible without an increase in stock price which will benefit all
shareholders proportionately. These potential realizable values are
based solely on arbitrarily assumed rates of appreciation required by
applicable SEC regulations. Actual gains, if any, on option exercises
and common stockholdings are dependent on the future performance of NBT
Bancorp Inc. Common Stock. There can be no assurance that the potential
realizable values shown in this table will be achieved.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Opion Term (2)
# of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees Price
Name Granted(1) In Fiscal Year ($/SH) Expiration Date 5% 10%
- ---- ---------- -------------- -------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Daryl R. Forsythe 36,345 16.7% $20.59 January 2009 $471,797 $1,195,620
Daryl R. Forsythe 10,500(3) 4.8% 20.44 April 2009 134,973 342,049
Joe C. Minor 16,485 7.5% 20.59 January 2009 213,464 540,958
Michael J. Chewens 9,660 4.4% 20.59 January 2009 125,087 316,994
John D. Roberts 14,595 6.7% 20.59 January 2009 188,991 478,937
Martin A. Dietrich 15,540 7.1% 20.59 January 2009 201,227 509,948
</TABLE>
NOTES:
(1) Nonqualified options have been granted at fair market value at the date
of grant. At the time of grant, options are 40% vested after one year
from grant date; an additional 20% vests each year thereafter.
(2) The potential realizable value of each grant of options, assuming that
the market price of the underlying security appreciates in value from
the date of grant to the end of the option term, at the specified
annualized rates. The assumed growth rates in price in NBT's stock are
not necessarily indicative of actual performance that may be expected.
The amounts exclude the cost by the executive to exercise such options.
(3) Options granted under reload feature on April 28, 1999.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table presents information concerning the
exercise of stock options during 1999 by each of the executive officers
named in the Summary Compensation Table above, and the value at
December 31, 1999, of unexercised options that are exercisable within
sixty days of December 31, 1999. These values, unlike the amounts set
forth in the column headed "Value Realized," have not been, and may
never be realized. All information has been adjusted for stock
dividends and splits. The underlying options have not been, and may
never be, exercised; and actual gains, if any, on exercise will depend
on the value of NBT Bancorp Inc. Common Stock on the date of exercise.
There can be no assurance that these values will be realized.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In the Money Options
Options at FY End at FY End(2)
---------------------- --------------------
39
<PAGE>
Shares Acquired Exercisable/ Exercisable/
Name On Exercise Value Realized (1) Unexercisable Unexercisable
- ---- ------------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C>
Daryl R. Forsythe 25,000 $283,778 148,818/58,515 $540,009/37,177
Joe C. Minor 13,625 156,248 43,579/18,339 136,881/10,367
Michael J. Chewens 5,769 63,114 24,362/11,291 69,186/6,911
John D. Roberts -0- -0- 39,125/15,743 130,865/8,580
Martin A. Dietrich -0- -0- 44,457/16,758 158,826/9,175
</TABLE>
NOTES:
(1) Represents difference between the fair market value of the securities
underlying the options and the exercise price of the options on the date of
exercise. (2) Represents difference between the fair market value of the
securities underlying the options and the exercise price of the options at
December 31, 1999.
RETIREMENT PLAN
The following table presents information with respect to the
pension plan of NBT and NBT Bank. The table shows the estimated annual
benefits payable upon retirement in specified compensation and years of
service classifications for participants retiring on December 31, 1999.
<TABLE>
<CAPTION>
YEARS OF PARTICIPATION
-------------------------------------------------------------
Final Average
EARNINGS 10 YEARS 20 YEARS 30 YEARS 40 YEARS
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$15,000 N $ 2,197.50 $ 3,246.46 $ 4,931.56 $ 6,904.19
Q 2,044.42 3,020.31 4,588.03 6,423.24
$25,000 N 3,662.50 5,602.35 8,219.27 11,506.98
Q 3,407.37 5,212.09 7,646.72 10,705.40
$40,000 N 6,286.81 9,633.94 13,247.86 18,547.00
Q 5,848.87 8,962.84 12,325.01 17,255.02
$70,000 N 12,526.81 19,118.45 27,117.88 37,965.03
Q 11,654.19 17,786.66 25,228.85 35,320.39
$100,000 N 18,766.81 28,812.11 40,987.90 57,383.06
Q 17,459.51 26,805.06 38,132.68 53,385.76
$200,000 N 30,414.81 51,986.92 79,129.50 110,781.30
Q 28,296.11 48,365.51 73,617.34 103,064.27
$300,000 N 30,414.81 63,058.30 96,538.80 116,581.10
Q 28,296.11 58,665.66 89,813.91 108,460.06
$400,000 N 30,414.81 63,058.30 96,538.80 116,581.10
Q 28,296.11 58,665.66 89,813.91 108,460.06
$500,000 N 30,414.81 63.058.30 96,538.80 116,581.10
Q 28,296.81 58,665.66 89,813.91 108,460.06
</TABLE>
N=Normal Form of Benefit for a Single Participant-5 Years Certain and
Continuous.
Q=Normal Form of Benefit for a Married Participant-Qualified Joint and
Survivor (50% of benefit payable to spouse at death of Participant).
Spouse's age assumed to be equal to Participant's age for above
calculations. Salaries are assumed to increase at a rate of 4% per year
from date of hire through date of retirement for above calculations.
NBT has in effect a noncontributory pension plan for all eligible
employees which is self-administered. Eligible employees are those who work in
excess of 1,000 hours per year, have completed one year of service and have
attained age 21. The plan is qualified under Section 401(a) of the Internal
Revenue Code. Employer contributions to the plan are computed on an actuarial
basis using the projected unit credit cost method including amortization of any
past service costs over a thirty-year period. Pension costs are funded as
accrued. There were no minimum required or maximum deductible contributions for
the plan year ending December 31, 1999. The plan provides for 100% vesting after
40
<PAGE>
five years of qualified service. Earnable compensation for the plan is defined
as fixed basic annual compensation, including bonuses, overtime and other
taxable compensation, but excluding NBT's cost for any public or private
employee benefit plan, including this retirement plan. Benefit computations are
based on an average final compensation amount which is the average annual
earnable compensation during the five consecutive year period in an employee's
last ten years of qualified service which produces the highest such average.
The annual normal retirement benefit of a participant who becomes
eligible for benefits shall equal the greater of the amounts described in A and
B below, with that sum then reduced by the amount described in C below.
A. The sum of (i), (ii), and (iii) below:
i. The participant's accrued benefit under the predecessor plan
as of September 30, 1989.
ii. For years of benefit service earned after September 30, 1989
and before January 1, 1995, the sum of 1.60 percent of the
participant's final average earnings for each year of benefit
service plus .60 percent of the participant's final average
earnings that is in excess of covered compensation for such
year of benefit service.
iii. For years of benefit service earned after December 31, 1994,
the sum of 1.25 percent of the participant's final average
earnings for each such year of benefit service, plus .60
percent of the participant's final average earnings that is in
excess of covered compensation for each such year of benefit
service.
B. The sum of 1.60 percent of the participant's final average earnings for
each year of benefit service through December 31, 1994, plus .65% of
the participant's final average earnings that is in excess of covered
compensation for each year of benefit service through December 31,
1994.
C. The annual normal retirement benefit payable to the participant from
the Retirement Plan of Irving Bank Corporation and Affiliated
Companies.
The number of years of benefit service taken into account under the
plan shall be limited to the greater of 30, or the number of years of
benefit service completed by the participant as of December 31, 1994
(up to a maximum of 40 for the basic benefit and a maximum of 35 for
the excess portion of the benefit).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
There are no employment contracts between NBT or NBT Bank and the named
executive officers.
CHANGE IN CONTROL CONTRACTS
The Company has entered into a change in control contract with each of
Messrs. Forsythe, Minor, Chewens, Dietrich, and Roberts. The contract provides
in general that, in the event that NBT or NBT Bank is acquired by another
company or any of certain other changes in control of NBT or NBT Bank should
occur and further if within 24 months from the date of such acquisition or
change in control Messrs. Forsythe's, Minor's, Chewens', Dietrich's, or Roberts'
respective employment with NBT or NBT Bank is terminated without cause or his
salary is reduced or his duties or responsibilities are changed (except in a
promotion) Messrs. Forsythe, Minor, Chewens, Dietrich, or Roberts will be
entitled to receive 2.99 times a base amount. An executive's base amount for
these purposes is his average annual compensation includible in his gross
taxable income for the five years preceding the year in which the change in
control occurs (or, if he has been employed by NBT for less than those five
years, for the number of those years during which he has been employed by NBT,
with any partial year annualized), including base salary, non-deferred amounts
under annual incentive, long-term performance, and profit-sharing plans,
distributions of previously deferred amounts under such plans, and ordinary
41
<PAGE>
income recognized with respect to stock options. The agreement is effective
until December 31, 2000, and is automatically renewed for one additional year
commencing at December 31, 2000 and each December 31 thereafter.
SUPPLEMENTAL RETIREMENTS BENEFITS
NBT agreed in January 1995 to provide Mr. Forsythe with supplemental
retirement benefits ("SERP"). The SERP will provide that annual supplemental
benefits at normal retirement will be equal to 75% of Mr. Forsythe's average
base salary and bonuses for the five salary years immediately preceding the date
of retirement, less the sum of annual amounts payable to the individual under
(a) NBT's pension plan, (b) NBT's ESOP, (c) social security, and (d) the pension
plan of former employers, as the case may be. Reduced amounts will be payable
under the SERP in the event Mr. Forsythe takes early retirement. Except in the
case of early retirement, payment of benefits will commence upon Mr. Forsythe's
attainment of age 65. The SERP provides that it shall at all times be unfunded.
A Supplemental Retirement Plan has also been provided to Mr. Roberts
who was employed by the Bank between February 15, 1965, through November 1, 1989
and from February 6, 1995, to date. The purpose of the plan is to provide the
benefits Mr. Roberts would have earned under NBT Bank's Qualified Retirement
Plan had he been employed continuously by the Bank from February 15, 1965,
through his actual termination of employment at anytime after February 6, 1995.
The plan will provide supplemental retirement income in excess of the retirement
benefits otherwise provided to the Executive under the Bank's Qualified
Retirement Plan.
DARYL R. FORSYTHE EMPLOYMENT
Mr. Forsythe was hired effective December 31, 1994, as President and
Chief Executive Officer of NBT and NBT Bank. In September 1999, as part of a
corporate restructure, Mr. Forsythe was promoted to Chairman of the Board and
Chief Executive Officer of NBT Bank, replacing Everett Gilmour who remains
Chairman of the Board of NBT. During 1999, Mr. Forsythe was employed at will
without an employment contract at an annual salary of $300,000. Commencing on
January 1, 2000, Mr. Forsythe and other senior executives of NBT entered into
employment agreements with NBT. Mr. Forsythe's contract will extend through 2002
(three years) with a provision to extend the term one additional year by mutual
agreement. Salary for 2000 will remain at $300,000 and will increase to $350,000
in 2001 and to $400,000 in 2002 (if the contract is extended by mutual
agreement, the salary for the additional year will remain at $400,000). Maximum
bonus opportunity, provided under the Executive Incentive Compensation Plan,
will be 80% of base pay throughout the life of the contract. The agreement also
grants Mr. Forsythe additional time off during 2001 and 2002 (with the 2002
provision continued if the contract term is extended) and other benefits such as
company car, country club privileges, participation in NBT's various employee
benefits plans such as the Stock Option Plan, the retirement plan, the 401k/ESOP
Plan, and various health, disability, and life insurance plans. The contract
also provides for an orderly transition of the chairmanship of NBT to Mr.
Forsythe in April 2001 when Mr. Gilmour's term of directorship ends.
NBT and Mr. Forsythe have entered into a wage continuation plan which
provides that during the first three months of disability Mr. Forsythe will
receive 100% of his regular wages reduced by any benefits received under social
security, workers' compensation, state disability plan or any other government
plan or other program, such as group coverage, paid for by NBT Bank.
Additionally, if the disability extends beyond three months, Mr. Forsythe will
receive payments of $7,000 per month under an insurance policy with The New
England. The annual cost of the policy is $7,734, which is reflected in the
Summary Compensation Table above. Mr. Forsythe and NBT have entered into a death
benefits agreement. The policy is a split-dollar life insurance policy on Mr.
Forsythe's behalf in the face amount of $800,000. NBT is the owner of the
policy. Upon Mr. Forsythe's death, his named beneficiary will receive $600,000
from the policy's proceeds, while NBT will receive the remainder of the policy's
proceeds. Upon termination of the death benefits agreement (e.g., upon
termination of Mr. Forsythe's employment), Mr. Forsythe is required to transfer
all of his right, title, and interest in the policy to NBT. NBT pays the premium
on the policy, 75% of the cost of which, being attributable to Mr. Forsythe, is
reflected in the Summary Compensation Table above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
42
<PAGE>
During the fiscal year ending December 31, 1999, Everett A. Gilmour,
Chairman of NBT and a member of the Compensation and Benefits Committee, served
on the Board of Directors of Preferred Mutual Insurance Company whose Chairman
is Paul O. Stillman who is a member of NBT's and of NBT Bank's Compensation and
Benefits Committee. Mr. Gilmour was Chairman of NBT from 1972 to 1988 and from
January 1995 to present. Mr. Gilmour was Chairman of NBT Bank from 1972 to 1988
and from January 1995 to September 1999.
The law firm of Kowalczyk, Tolles, Deery and Johnston, of which
Director Andrew S. Kowalczyk, Jr., Chairman of the Compensation and Benefits
Committee, is a partner, provides legal services to NBT and NBT Bank from time
to time as does the law firm of Stafford, Trombley, Owens & Curtin, of
which Director William L. Owens is a partner. These services occur in the
ordinary course of business and at the same terms as those prevailing for
comparable transactions with other law firms.
John D. Roberts, an executive officer of NBT, is a director of the I.L.
Richer Co. whose President and CEO, John C. Mitchell, serves on the Compensation
and Benefits Committee.
Richard Monroe, a member of the Compensation and Benefits Committee, is
a retiree of NBT and served as Senior Vice President - Manager of Newark Valley
Office from 1973 to 1985.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The primary responsibility of the Compensation and Benefits Committee
is to design, implement, and administer all facets of the compensation and
benefits programs of NBT for all employees. The committee is composed entirely
of outside, non-employee directors. The committee approves participants who are
eligible for the Executive Incentive Compensation Plan, sets the compensation
plan targets for each year and approves payouts under the plan, awards stock
option grants, approves the annual contribution to the Employee Stock Ownership
Plan for all employees, approves executive compensation, annually reviews the
performance of the CEO and recommends the CEO compensation package to the NBT
Board. The committee presents its actions to the NBT Board for approval. The
objective of NBT's executive compensation program is to develop and maintain
executive reward programs which contribute to the enhancement of shareholder
value, while attracting and retaining key executives who are critical to the
long-term success of NBT. It is expected that total compensation will vary
annually, based on NBT and individual performance.
The compensation committee retains the services of an executive salary
and benefits consultant, who is independent and unassociated with NBT, the CEO,
or any member of the NBT Board or management, to assist in setting the total
compensation package of senior management. To assist the committee in fulfilling
its responsibilities, the independent consultant provides advice and guidance
directed toward ensuring that the NBT Board's practices are consistent within
the industry, consistent with and in support of the goals and objectives of NBT
and fairly applied throughout NBT.
The committee believes it is critical to the ongoing success of NBT
that its executives continue to be among the most highly qualified and talented
available to lead the organization in the creation of shareholder value. In
support of this objective, the philosophy of the committee in approving and
recommending executive compensation is based upon the following criteria:
|X| Design a total compensation package that includes a base
salary, an annual incentive plan that is linked to stockholder
interests, and a stock option plan that encourages share
ownership and is also linked with stockholder interests.
|X| Set base salaries that are commensurate with each
individual's responsibility, experience, and contribution to
NBT.
|X| Ensure that salaries are competitive within the industry so as
to be able to attract and retain highly qualified executives.
43
<PAGE>
|X| Promote a pay for performance culture.
NBT's executive compensation program, discussed in detail below, is
made up of both fixed (base salary) and variable (incentive) compensation
elements. Variable compensation consists of annual cash incentives and stock
option grants. The committee and the management of NBT believe that variable
compensation should be based both on short-term and long-term measurements and
be directly and visibly tied to NBT performance, so that, while introducing
appropriate risk in the payout levels, such compensation will promote a pay for
performance culture within the executive team.
In reviewing executive compensation, the committee considers a variety
of factors including past performance and the NBT Board's expectations for
improvement in the future. The CEO and senior executive management review
executive compensation throughout the year. The CEO presents recommendations for
compensation for the Executive Management Team to the Committee each year prior
to year-end for their approval. The committee annually reviews the CEO's
performance against pre-established goals and with respect to the performance of
NBT. The committee considers improvements in historical measures such as ROA,
ROE, profit levels, non-performing assets to total assets and net non-interest
expense to total expense in its assessment of performance. While net income was
down $0.7 million or 3.8% in 1999 from 1998, income before taxes of $30.0
million in 1999 improved dramatically by $6.3 million, or 26.7%, over the 1998
amount of $23.7 million. The efficiency and expense ratios also improved. NBT
maintained safety and soundness and once again received a "blue ribbon" and
"five star" ratings by outside agencies.
BASE SALARY. Although not specifically weighted, the committee considered the
performance of each executive, the level of responsibility, and current
inflationary indices in establishing base salaries for executive officers. The
committee has established salary ranges with the assistance of the salary and
benefits consultant; salary ranges are based upon responsibility, experience,
and individual performance. Mr. Forsythe receives an annual salary of $300,000
for 2000. In determining Mr. Forsythe's salary, the committee took into
consideration the salaries of CEOs of similar-sized banks, the performance of
the Bank, and the recommendations of the salary consultant.
EXECUTIVE INCENTIVE COMPENSATION PLAN. The committee, working with an outside
salary and benefits consultant, designed the current incentive plan that links
the payout with stockholder interests. The committee reviews the compensation
plan annually. The compensation plan, as it now exists, has three components
which determine the potential award within such plan: Return on Assets, Return
on Equity, and a net income goal. The compensation plan has a minimum net income
requirement before any payout is possible. There are participative levels within
the compensation plan which range from the maximum payout being 75% of salary
for presidents of NBT's subsidiaries and 30% for the lowest level. Each level
has a corporate performance component and an individual performance component.
The corporate component is 80% and the personal component is 20% for the highest
level below CEO. The committee sets "stretch" targets under the plan.
The executive incentive compensation plan established a separate level
for the CEO. The compensation plan provided for a maximum payout of 80% of
salary with the range of the bonus awarded being based on corporate performance.
Mr. Forsythe's bonus earned in 1999 was $200,000 (66.7%). The bonus was paid in
2000.
The committee evaluated other executives receiving bonuses on the basis
of comparisons to predetermined corporate and personal goals. Each officer
achieved a majority of his goals and received bonuses comparably.
STOCK OPTION PLAN. In order to provide long-term incentives to key employees,
including executive officers, to encourage share ownership by key officers, and
to retain and motivate key officers to further stockholder returns, NBT has a
Stock Option Plan. The committee believes that stock options, which provide
value to participants only when NBT's stockholders benefit from stock price
appreciation, are an important component of NBT's executive compensation
program. The number of options currently held by an officer is not a factor in
determining individual grants. The value of stock options granted in 1999 ranged
from 250% of base compensation at the CEO level down to 1,000 shares for
selected individuals. "Value" is determined by multiplying the number of options
44
<PAGE>
granted by the fair market value of the NBT common stock which underlies such
options on the date of the grant. With respect to the options granted in 1999 to
the CEO and to all other selected officers, the committee in making the awards
considered the various factors referred to above, especially the growth of NBT,
its financial condition, and profitability. The committee did not apply any
specific weighting to the factors considered. The number of options which the
committee granted to the officers was based upon individual performance and
level of responsibility, subject to committee-imposed restrictions. The
Committee determined that the award level must be sufficient in size to provide
a strong incentive for participants to work for long-term business interests of
NBT, thereby creating additional stockholder value resulting from the
appreciation of NBT stock, and to become significant owners of NBT. Options are
granted at the fair market value of NBT's stock at the time of grant. Under the
1993 Plan, options vest at the rate of 40% after one year of date of grant and
an additional 20% each year thereafter. Since an option gives the officer only
the right to buy these shares at a fixed price over a future period, the
compensation value is derived by the incentive to increase shareholder value in
the future; hence, the motivation to improve NBT's performance.
MEMBERS OF THE COMPENSATION AND BENEFITS COMMITTEE
Andrew S. Kowalczyk, Jr.- Chairman
Everett A. Gilmour
Dr. Peter B. Gregory
Paul O. Stillman
John C. Mitchell
Richard F. Monroe
William L. Owens
401(K) AND EMPLOYEE STOCK OWNERSHIP PLAN
NBT amended the Employee Stock Ownership Plan and 401(k) Plan, merging
the two plans together effective January 1, 1997. This merged and amended 401(k)
and Employee Stock Ownership Plan is for the exclusive benefit of eligible
employees and their beneficiaries. The Plan is administered by NBT Bank.
Discretionary and matching contributions are primarily in NBT's common stock.
The stock is voted by the Plan's Trustees only as participants direct the
Trustees to vote by properly executing a proxy. At December 31, 1999, the Plan
owned 883,321 shares of NBT's common stock, 6.74% of total shares outstanding.
All employees of NBT and NBT Bank are eligible to participate in the
plan after one year's service, if they are at least 21 years of age and complete
1,000 hours of service during the year. The Plan provides for partial vesting of
an employee's interest in the Plan at 20% per year with 100% vesting being
achieved after five years of qualified service.
However, 401k participants are eligible to make salary reduction
contributions after the date of hire if they are scheduled to work 1,000 hours
in a twelve-month period. The plan provides that an eligible employee may elect
to defer up to 15% of his or her salary for retirement (subject to a maximum
limitation of $10,000) and that NBT or NBT Bank will provide a matching
contribution of 100% of the first 5% of the employee's deferred amount. In 1999,
NBT or NBT Bank provided a matching contribution to Mr. Forsythe of $8,000, Mr.
Minor of $8,000, Mr. Dietrich of $8,000, Mr. Chewens of $7,692 and Mr. Roberts
of $8,000. These payments are reflected in the Summary Compensation Table.
For the ESOP, NBT makes discretionary contributions, as determined
annually by the NBT Board, to a separate trust for the benefit of the eligible
employees and their beneficiaries. Annual contributions may not exceed amounts
deductible for federal income tax purposes. Employer contributions are allocated
among all participants in proportion that each participant's compensation for
the plan year bears to the total compensation of all participants for the plan
year (compensation for the plan is defined as total compensation during a Plan
Year that is subject to income tax and reflected on the W-2 Form, but including
45
<PAGE>
a salary reduction contribution to any plan or arrangement maintained by the
company, and excluding distributions from non-qualified plans, income from the
exercise of stock options, and severance payments). The NBT Board may amend the
plan at any time.
The value of a participant's ESOP account is the total of allocated
employer contributions, employee salary deferrals, plus the earnings on those
contributions and deferrals, plus or minus any gain or loss on the investment of
the contributions and deferrals.
Normal retirement age under the Plan is 65. The Plan also provides for
early retirement at age 55 and disability retirement at any age. In the event a
participant dies before retiring under the Plan, the value of his or her account
in the Plan will be paid to his or her beneficiary.
A participant's retirement benefit under the Plan is the value of his
or her account at the date of retirement. Effective January 1, 1985, the normal
form of retirement benefit for a married employee is a joint and survivor
annuity; for an employee who is not married, a lump sum distribution of cash.
Other available retirement options are: 1) installment payments of cash and 2)
distributions of the account value in employer securities, both subject to
obtaining spousal waivers.
As a qualified plan (under current law) employer contributions and
employee salary deferrals are not currently taxed to employees; and retirement
benefits will be taxable to employees when received from the Plan.
In 1999, NBT made a discretionary contribution of $487,384 to the Plan.
The Summary Compensation Table reflects payments made to NBT's named executive
officers under the Plan.
STOCK OPTION PLAN
The NBT Board adopted stock option plans in 1986 and in 1993, which the
NBT stockholders approved at the 1987 and 1993 Annual Meetings, respectively,
and amended the 1993 plan which the stockholders approved at the 1998 Annual
Meeting. The purposes of the plans are to encourage ownership of capital stock
of NBT by officers and other key employees of NBT and its subsidiaries in order
to help attract and retain in its service persons of exceptional competence, to
furnish added incentives for them to increase their efforts on behalf of NBT,
and to gain for NBT the advantages inherent in key employees having an ownership
interest in NBT. Upon approval of the 1993 Stock Option Plan, the 1986 plan was
"frozen" and NBT may not grant any new options or stock appreciation rights
under that plan.
The 1993 Plan is intended to promote the interests of NBT and its
stockholders by ensuring continuity of management and increased incentive on the
part of officers and other key management employees of NBT and its subsidiaries
responsible for major contributions to effective management, through
facilitating their acquisition of equity interests in NBT.
The 1993 Plan authorizes the granting of options to purchase shares of
the NBT common stock to officers and key management employees of NBT and its
subsidiaries. Common stock issued under the 1993 Plan may be authorized but
unissued common stock or reacquired common stock, or both. The 1993 Plan is
administered by the NBT Board, the Compensation and Benefits Committee, or a
subcommittee of that committee, consisting of at least three NBT Directors who
are disinterested directors as defined by Rule 16b-3 adopted by the SEC under
the Securities Exchange Act of 1934.
The committee (or subcommittee, as the case may be) is authorized to
determine the employees to whom grants of options may be made under the 1993
Plan, the number and terms of options to be granted to each employee selected,
the time or times when options will be granted, the period during which options
will be exercisable, and the exercise price per share of common stock. The
exercise price may not be less than the fair market value of a share of common
stock at the date of the option grant.
46
<PAGE>
The recipient of options granted to an employee under the 1993 Plan may
not transfer his or her options otherwise than by will or by the law of descent
and distribution, and such option may be exercisable during that person's life
only by him or her. No option may be exercisable after the expiration of ten
years from the date the option is granted. The terms of an option must provide
that it is exercisable only in specified installments during the option period:
to the extent of forty percent of the number of shares originally covered with
respect to each particular grant of options, at any time after the expiration of
one year from the date of grant, and to the extent of an additional twenty
percent of such number of shares upon the expiration of each succeeding year, so
that upon the expiration of four years from the date of grant one hundred
percent of such number of shares will be eligible for exercise by the recipient.
The installments are cumulative. Upon termination of his or her employment,
options will be exercisable to the extent that he or she was entitled to
exercise the option at the date of termination; upon the employee's death, the
option will become exercisable in full on the date of death.
The 1993 Plan provides that it will expire on April 18, 2008. The 1993
Plan provides that for each share of common stock purchased by an optionee upon
the exercise of a stock option, the optionee will receive a replacement option
to purchase another common share. Granting of a replacement option is subject to
the express approval of the NBT Board or committee. The 1993 Plan provides that
immediately upon the occurrence of a change in control of NBT, all outstanding
options will immediately vest and become exercisable in full. If an optionee's
employment with NBT or its subsidiaries is terminated for cause, the optionee's
options will be canceled and rendered null and void on the date the employment
is terminated.
The 1993 Plan provides that, if there occurs a change in the number of
outstanding shares of common stock by reason of a stock split, stock dividend,
recapitalization, reclassification, merger, consolidation, combination or
exchange of shares or other similar event, the Committee may, in its discretion,
make such adjustments as may be equitably required in the number of shares that
may be issued under the 1993 Plan, in the number of shares which are subject to
outstanding options, and in the purchase price per share relating to the
outstanding options.
The NBT Board may amend the 1993 Plan at any time without the approval
of the stockholders of NBT, but no amendment which (a) increases the aggregate
number of shares as to which options may be granted under the 1993 Plan (other
than equitable adjustments referred to in the immediately preceding paragraph
which will not constitute amendments), (b) changes the class of persons eligible
to receive options, (c) changes the provisions of the 1993 Plan regarding the
option price, (d) extends the period during which options may be granted, (e)
extends the maximum period after the date of grant during which options may be
exercised, or (f) changes the provision in the 1993 Plan as to qualification for
membership on the committee will be effective unless and until the amendment is
approved by the stockholders of NBT. In the event of a dissolution or
liquidation of NBT or a merger or consolidation in which NBT is not to be the
surviving corporation or a sale of substantially all the assets of NBT to
another corporation, every option outstanding under the 1993 Plan will
terminate, except that the optionee will have the right to exercise, prior to or
simultaneously with such event, his option to purchase any or all shares then
subject to the option, including those, if any, which have not theretofore
become available for purchase under other provisions of the 1993 Plan.
As of December 31, 1999, 1,676,947 shares of its common stock have been
reserved for issuance under the Plans. In 1999, NBT granted non-qualified
options, which expire in 2009, for 218,825 shares to 53 key employees, at option
prices ranging from $17.12 to $20.60. Options for 817,890 shares were
outstanding at December 31, 1999 with option prices ranging from $5.84 to $20.60
per share for all officers as a group. All grants of options were at 100% of
fair market value as of date of the grant. We have adjusted Options and option
prices for all stock dividends to date.
FEDERAL INCOME TAX CONSEQUENCES
Under the present provisions of the Internal Revenue Code of 1986, as
amended, the federal income tax consequences of the 1993 Plan are as follows:
the granting of a non-qualified option to an employee will not result in taxable
income to the recipient or a deduction in computing the income tax of NBT or any
subsidiary. Upon exercise of a non-qualified option, the excess of the fair
market value of the shares acquired over the option price is (a) taxable to the
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optionee as ordinary income and (b) deductible in computing NBT's income tax,
subject to satisfying applicable withholding requirements and general rules
relating to reasonableness of compensation.
EXECUTIVE INCENTIVE COMPENSATION PLAN
NBT adopted, effective January 1, 1992, an Executive Incentive
Compensation Plan to promote individual motivation for the achievement of NBT's
financial and operating objectives and to aid in attracting and retaining highly
qualified personnel. Pursuant to the compensation plan, officers of NBT are
eligible to receive cash in the event certain performance criteria are
satisfied. The operation of the compensation plan is predicated on NBT's
attaining and exceeding management performance goals. The goals consist of
return on average assets, return on stockholders' equity, and the level of net
income. Unless a participant elects to have all or a portion of his or her award
deferred, distribution of awards will be made in cash during the first quarter
after year-end. The Compensation and Benefits Committee must approve all
distributions. This committee has broad discretion in determining who will be
eligible to receive incentive compensation awards and has full power and
authority to interpret, manage, and administer the compensation plan. The
compensation plan provides that the Chief Executive Officer of NBT will
recommend to the committee the amounts to be awarded to individual participants.
The Chief Executive Officer may also recommend a change beyond the formula to a
bonus award to a participant. The committee has the authority to amend the
recommendation.
The committee makes bonus awards in accordance with an established
formula. An employee will be placed into a particular level, according to the
participant's office and responsibility. Depending upon the particular level,
the 2000 award will range from 0% to 50% of the participant's regular salary at
the lowest level to 0% to 80% of the salary at the CEO level. The formula
provides that the financial criteria necessary for plan operation consist of
return on average assets, return on equity, and the level of net income.
Incentive distributions will be based upon attainment of corporate performance
goals to establish the total awards. The total awards, in turn, will be
determined by reference to both corporate and individual components. The
corporate component will be determined by attainment of corporate goals (as
established by the Committee) and the individual component will be determined by
attainment of individual goals (objectives mutually agreed upon between
participants and the Chief Executive Officer). The corporate component will
range from 100% for the highest level (the President and Chief Executive
Officer) to 50% for the lowest level, whereas the individual component will
range from 0% for the highest level to 50% for the lowest level.
The compensation plan requires that the Chief Executive Officer will
have purchased such number of shares of NBT common stock as will equal at the
end of the five years twice his or her current base salary.
In addition, the compensation plan also requires that the Presidents of
any of NBT's subsidiaries will have purchased such number of shares of NBT
common stock as will equal at the end of five years from their appointment as
President his or her current base salary.
We include the amount of incentive compensation awards to the
individuals named in the Summary Compensation Table in the "Bonus" column of
that table. We made payments of bonuses for 1999 under the Plan in January 2000.
PERSONAL BENEFITS
During the past fiscal year, no director, officer or principal
stockholder or members of their respective families received any banking
services or other benefits, including use of any staff, facilities or properties
of NBT, not directly related to job performance and not generally available to
all employees of NBT. We routinely provide health insurance and group life
insurance to all staff members.
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RELATED PARTY TRANSACTIONS
NBT Bank has had, and expects in the future to have, transactions in
the ordinary course of business with directors and officers of NBT and NBT Bank
on the same terms as those prevailing at the time for comparable transactions
with others. NBT Bank has extended credit to its directors and officers and
their business interests. The total of these loans was $3,563,357, $4,441,730
and $6,401,538 at December 31, 1997, 1998, and 1999, respectively, representing
2.9%, 3.4% and 5.1% of equity capital at those dates, respectively. The highest
aggregate amounts outstanding on such loans during 1997, 1998, and 1999 were
$5,008,597, $5,313,091, and $7,140,566, respectively, which represented 4.0%,
4.1% and 5.6% of equity capital at those interim dates, respectively.
NBT Bank made all outstanding loans to such persons in the ordinary
course of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and, in the opinion of management, do not present more than
normal risk of collectability or present other unfavorable features. Based upon
the information available to it, NBT Bank does not consider that any of the
officers or directors of NBT Bank or NBT had a material interest in any
transactions during the last year, except as stated above, or have such an
interest in any proposed transactions.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
(i.e., price change, reinvestment of cash dividends and stock dividends
received) on NBT's common stock against the cumulative total return of the
NASDAQ Stock Market (US Companies) Index and the Index for NASDAQ Financial
Stocks. The stock performance graph assumes that $100 was invested on December
31, 1994. The graph further assumes the reinvestment of dividends into
additional shares of the same class of equity securities at the frequency with
which dividends are paid on such securities during the relevant fiscal year. The
yearly points marked on the horizontal axis correspond to December 31 of that
year. We calculate each of the referenced indices in the same manner. All are
market-capitalization-weighted indices, so companies judged by the market to be
more important (i.e., more valuable) count for more in all indices.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG NBT BANCORP INC.,
THE INDEX FOR NASDAQ FINANCIAL STOCKS, AND THE NASDAQ STOCK MARKET (US
COMPANIES) INDEX.
(FOLLOWING IS A TABULAR PRESENTATION OF DATA POINTS FOR THE GRAPH WHICH APPEARS
HERE IN THE PAPER COPY)
Measurement NBT NASDAQ NASDAQ
Period (Fiscal BANCORP Financial Composite Index
Year Covered) INC. Stock Index (US Companies)
4Q94 $ 100.00 $ 100.00 $ 100.00
1Q95 $ 97.70 $ 110.70 $ 108.90
2Q95 $ 99.96 $ 119.40 $ 124.65
3Q95 $ 102.23 $ 134.65 $ 139.59
4Q95 $ 114.65 $ 145.16 $ 140.95
1Q96 $ 112.23 $ 149.69 $ 147.82
2Q96 $ 108.96 $ 151.61 $ 159.00
3Q96 $ 113.16 $ 165.72 $ 164.71
4Q96 $ 127.74 $ 185.63 $ 173.41
1Q97 $ 139.45 $ 192.95 $ 164.18
2Q97 $ 193.26 $ 225.04 $ 194.09
3Q97 $ 190.89 $ 262.56 $ 227.07
4Q97 $ 206.41 $ 290.88 $ 211.79
1Q98 $ 215.36 $ 304.27 $ 247.83
2Q98 $ 261.97 $ 293.40 $ 256.04
3Q98 $ 239.20 $ 242.08 $ 229.14
4Q98 $ 257.11 $ 282.83 $ 296.88
1Q99 $ 231.49 $ 273.19 $ 333.51
2Q99 $ 229.21 $ 295.34 $ 364.24
3Q99 $ 195.47 $ 247.56 $ 372.63
4Q99 $ 185.68 $ 257.48 $ 552.47
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PROPOSAL 2
(ONLY STOCKHOLDERS OF NBT)
PROPOSAL TO RATIFY THE BOARD OF DIRECTORS ACTION IN SELECTION OF
KPMG LLP AS NBT'S INDEPENDENT AUDITOR
The NBT Board upon the recommendation of the Audit, Compliance and Loan
Review Committee has appointed KPMG LLP as independent auditor of NBT to examine
the financial statements of NBT for the fiscal year ending December 31, 2000.
KPMG LLP (and its predecessors) has served as NBT's independent auditor
since January 1987. Ratification of such appointment will require the
affirmative vote of the holders of a majority of the shares of NBT common stock
represented at the annual meeting in person or by proxy and entitled to vote.
THE NBT BOARD RECOMMENDS A VOTE FOR PROPOSAL NO. 2. In the event the NBT
stockholders fail to ratify this appointment, the NBT Board will consider such
negative vote as a directive to select other auditors for the current year. The
named agents will vote proxies FOR this proposal unless stockholders specify
otherwise in their proxies.
We expect representatives of KPMG LLP to be present at the NBT annual
meeting. Those representatives will have an opportunity to make a statement if
they desire to do so and will also be available to respond to appropriate
questions.
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PROPOSAL 3
(ALL STOCKHOLDERS OF NBT AND ALL STOCKHOLDERS OF PIONEER AMERICAN)
THE ISSUANCE OF NBT COMMON STOCK IN THE MERGER AND RATIFICATION 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 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 carefully in its entirety. We qualify this summary in
its entirety by reference to the merger agreement.
GENERAL
We expect to complete the merger in the second quarter of 2000. NBT
will be the surviving corporation in the merger. Each share of NBT common stock
issued and outstanding immediately prior to the effective time of the merger
will remain issued and outstanding as one share of common stock of NBT. Each
share of Pioneer American common stock issued and outstanding at the effective
time of the merger will convert into the right to receive 1.805 shares of NBT
common stock upon completion of the merger.
Upon completion of the merger, NBT will issue to the former Pioneer
American stockholders 1.805 shares of NBT common stock for each share of Pioneer
American common stock outstanding as of the effective time of the merger. If
there are no stockholders of Pioneer American who shall have exercised their
dissenters' rights with respect to the merger and to whom NBT shall have paid
cash in exchange for their dissenting shares of Pioneer American common stock,
NBT will issue an aggregate of approximately 5.2 million of its shares of common
stock to the former Pioneer American stockholders at the effective time of the
merger. Under the regulations of the Nasdaq Stock Market, NBT must receive the
approval of its stockholders prior to its issuance of its common stock to the
former Pioneer American stockholders in the merger. Nasdaq regulations require
the affirmative vote of a majority of the shares of NBT common stock present, in
person or by proxy, and voting and entitled to vote at the NBT annual meeting to
approve the share issuance proposal.
Under the merger agreement, Levon Acquisition Company, a newly
organized Delaware corporation formed solely for the purpose of the merger, will
merge with and into Pioneer American, the separate corporate existence of Levon
will cease, and Pioneer American will survive and continue its corporate
existence under the laws of the Commonwealth of Pennsylvania. The merger of
Levon with and into Pioneer American will become effective upon the filing of
the Certificate of Merger with the Secretary of State of the Commonwealth of
Pennsylvania or at such later time specified in the Certificate of Merger.
Immediately following the completion of that merger, Pioneer American will merge
with and into NBT, the separate corporate existence of Pioneer American will
cease, and NBT will survive and continue its corporate existence under the laws
of the State of Delaware. We refer below to these two mergers collectively as
the merger. Subject to the satisfaction or waiver of conditions set forth in the
merger agreement and described in "The Issuance of NBT Common Stock in the
Merger and Ratification of the Merger Agreement -- Conditions to Complete the
Merger," the merger of Pioneer American with and into NBT will become effective
upon the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware or at such later time specified in the Certificate of Merger.
We refer below to the time of effectiveness of the merger between Pioneer
American and NBT as the effective time of the merger.
The NBT Certificate of Incorporation will be the Certificate of
Incorporation of the combined company upon completion of the merger. The NBT
bylaws will be the bylaws of the combined company.
BACKGROUND OF THE MERGER
The senior managements of NBT and Pioneer American have from time to
time considered the possibility of acquisitions of and strategic combinations
with other financial institutions, including other bank holding companies. As
part of their long term planning, the NBT Board and the Pioneer American Board
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have periodically reviewed and evaluated various strategic options and
alternatives available to maximize the economic return to their stockholders. In
considering and engaging in these transactions, NBT and Pioneer American have
taken into account various factors, including their potential strategic fit with
these institutions based upon their businesses (both banking and non-banking),
their management and employee cultures, and the geographic location and breadth
of their businesses. In addition, in view of recent trends toward consolidation
in the financial services industry regionally and nationally, the senior
managements of NBT and Pioneer American have from time to time had informal
discussions with senior managements of other comparably-sized financial
institutions regarding potential business combination transactions. Prior to the
time when NBT and Pioneer American began their initial discussions, NBT and
Pioneer American had never conducted discussions between themselves.
Prior to its discussions with Lake Ariel, a bank holding company
located in Lake Ariel, Pennsylvania, which NBT acquired in February, 2000, all
of NBT's previous discussions to explore growth opportunities through
acquisitions of branches and/or banks related to New York financial institutions
and during the 1997-1999 period had not culminated in an acquisition opportunity
that NBT deemed of merit. The Pioneer American Board has recognized the need for
Pioneer American to be larger in order to respond to the demands of the
financial industry market and to better compete within the industry. From time
to time, the Pioneer American Board has considered acquisitions, both as a
seller and buyer, but these considerations had not materialized to the point
where serious potential mergers could be negotiated.
In early 1999, the Pioneer American Board retained Danielson Associates
Inc. as its investment banker to evaluate Pioneer American's strategic
alternatives. In mid-September 1999, Daryl R. Forsythe, President and Chief
Executive Officer of NBT contacted Arnold Danielson of Danielson Associates Inc.
to express NBT's interest in increasing its market share in northeastern
Pennsylvania beyond the potential created by the pending Lake Ariel merger.
During the September 1, 1999, meeting of the NBT Board, there was a
discussion of the potential opportunity to merge Pioneer American into NBT. The
concept would be to acquire Pioneer American and merge it with LA Bank to form a
large, locally managed, community bank in northeastern Pennsylvania. The "new
bank" would be operated as a wholly owned subsidiary of NBT. After discussion,
the Board authorized Mr. Forsythe to pursue the opportunity.
On September 28, 1999, Mr. Danielson discussed with Pioneer American's
Board the discussions with Mr. Forsythe and the details of the potential merger.
The Board authorized John W. Reuther, President and Chief Executive Officer of
Pioneer American, to pursue discussions with NBT and to evaluate interests of
any other potential merger candidates.
The Pioneer American Board visited NBT headquarters in Norwich, NY on
October 6, 1999. The purpose of the meeting was to meet Mr. Forsythe and certain
members of the NBT executive management team (Martin A. Dietrich, President and
Chief Operating Officer of NBT Bank; Joe C. Minor, President and Chief Operating
Officer of NBT Financial Services; Michael J. Chewens, Executive Vice President
and Chief Financial Officer; Jane Neal, Executive Vice President and Director of
Human Resources and John D. Roberts, Executive Vice President and Chief Trust
Officer) and to become more familiar with NBT and its markets. The meeting
helped both parties understand the potential benefits of merging.
Between September 28, 1999 and mid-October 1999 the parties exchanged
financial information under a customary confidentiality agreement. On October
19, 1999, Mr. Forsythe visited Mr. Reuther in Carbondale to present a letter of
intent, which outlined the general terms of a potential merger agreement. Both
parties felt the meeting confirmed the merits of merging the two companies,
especially in light of the recently announced agreement with Lake Ariel.
During the ensuing weeks, conversations continued between Messrs.
Forsythe and Reuther. Throughout the discussions, Pioneer American consulted
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with its financial advisor and counsel. Pioneer American's advisor reviewed,
in general, the merger and acquisition market, NBT's financial condition,
operating performance and common stock trading history and the proposed exchange
ratio.
On November 2, 1999, Mr. Forsythe again met with Mr. Reuther and the
Pioneer American Board in Carbondale to clarify the terms of the letter of
intent and to offer to extend the letter of intent to November 19, 1999, to give
the Board more time to consider the proposal. Several items were discussed,
including the proposed structure, Board seats, deal parameters and potential
growth opportunities that could result if the merger of LA Bank and Pioneer
American with NBT were to occur.
On November 4, 1999, Mr. Forsythe sent Mr. Reuther a letter which
extended the October 19, 1999 letter of intent to November 19, 1999, expanded
the potential NBT Board seats to be offered to Pioneer American directors to
three and adjusted the exchange ratio to reflect a 5% stock dividend that was
recently announced. The letter also further discussed the merits of the merger
and presented Pioneer American with NBT's due diligence information request.
On November 17, 1999, Pioneer American's Board voted to pursue the
merger with NBT in earnest with the goal of arriving at a definitive agreement
of merger. On this date the law firm of Blank Rome Comisky & McCauley, L.L.P.,
of Philadelphia, Pennsylvania was retained to represent Pioneer American in the
merger process. Danielson Associates Inc. and Pioneer American entered into an
agreement for Danielson Associates Inc. to act as financial advisor to Pioneer
American in connection with issuance of a fairness opinion related to the
proposed acquisition of Pioneer American by NBT.
On November 23, 1999 and November 24, 1999, Pioneer American's due
diligence team visited the corporate office of NBT to perform the necessary due
diligence as suggested by counsel and mandated by the Pioneer American Board.
Items reviewed were
|X| corporate documents;
|X| financial reports;
|X| regulatory and legal compliance reports;
|X| tax returns and related matters;
|X| board of directors and management information;
|X| transactions between directors, officers, employees and their
affiliates;
|X| compensation committee interlocks and insider participation
information, personnel policies, procedures and benefits;
|X| schedule of office locations, facilities and related matters;
|X| lending activities;
|X| major non-performing asset and reserve policy information;
|X| lawsuits, assessments and claims;
|X| savings activities;
|X| insurance coverage;
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|X| investment and liquidity policy; and
|X| various other matters.
On November 22, 1999, the NBT due diligence team visited Pioneer
American in Scranton to perform its review, which they completed on November 24,
1999. The NBT team reviewed similar types of information as had Pioneer
American.
On November 26, 1999, counsel for NBT, Duane, Morris & Heckscher LLP,
distributed to the parties a first draft of the definitive agreement for review
by both parties. The parties at this time and during the following days
discussed with their respective financial and legal advisors the terms of the
draft of the merger agreement. Each company authorized its legal counsel to
discuss revisions to the agreement with the intent of expediting the review
process. Legal counsel for NBT circulated a second draft of the definitive
agreement incorporating the negotiated revisions on December 4, 1999.
The Pioneer American Board held a special meeting on December 7, 1999.
At the meeting, Pioneer American's advisors reviewed the terms of the draft
merger agreement and related agreements, including the stock option agreement,
the potential financial and strategic benefits of the transaction, and the
financial and valuation analysis of the proposed transaction. The Board received
a report on the results of the due diligence review. Counsel described the
exchange ratio; how it was negotiated and the mechanisms for a termination in
the event of an extraordinary decline in the price of NBT stock. Danielson
Associates Inc. gave an analysis of the transaction and delivered its opinion
that the exchange ratio was fair from a financial point of view to Pioneer
American's stockholders. The Pioneer American Board authorized the execution of
the merger agreement on the terms reviewed and discussed by the Pioneer American
Board.
The NBT Board convened a special meeting on December 7, 1999, to review
the Definitive Agreement negotiated with Pioneer American. David A. Budd and
Michael Rasmussen from McConnell, Budd and Downes, Inc., NBT's investment
banker, were present to go over the merger highlights. Brian Alprin, NBT's
counsel from Duane, Morris & Heckscher LLP, was present by telephone and
answered several legal questions regarding the documents. After discussion, the
Board approved the agreement.
Each company made a public announcement on December 8, 1999.
RECOMMENDATION OF THE NBT BOARD AND NBT'S REASONS FOR THE STOCK ISSUANCE
AND THE MERGER
The NBT Board believes that the issuance of its common stock to the
former Pioneer American stockholders upon completion of the merger and the terms
of the merger agreement are fair to, and in the best interests of, NBT and the
NBT stockholders. Accordingly, the NBT Board has unanimously approved the stock
issuance and the merger agreement and determined that the stock issuance and the
merger and the other matters contemplated in the merger agreement are advisable.
The NBT Board recommends unanimously that NBT's stockholders vote FOR approval
of the stock issuance and the ratification of the merger agreement.
In reaching its determination and recommendation, the NBT Board
consulted with NBT's management, as well as its financial advisors, legal
counsel and accountants, and considered a variety of factors. The material
factors considered by the NBT Board in reaching the foregoing determination and
recommendation, all of which the NBT Board deemed favorable, are described as
follows:
|X| NBT's strategic expansion plans and acquisition objectives:
|X| its growth into new markets, in New York and other
states; further extension of its franchise into
northeastern Pennsylvania's largest metroplex
(Wilkes-Barre/Scranton), thus building on the Lake
Ariel acquisition, the effect of which would be a
diversification of NBT's banking operations, and the
anticipated improved stability of the combined
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company's businesses and earnings in varying economic
and market climates relative to NBT on a stand-alone
basis made possible by the merger as a result of
substantially greater geographic and asset
diversification;
|X| expansion of its opportunities for the delivery of
its financial services, especially its trust
services, and the belief that the larger size of the
combined company would place the combined company in
a stronger position to satisfy the financial needs of
its expanded customer base, with increased product
capabilities and services, respond to changes
affecting the banking and financial services
industries, and compete more effectively with
financial institutions within its expanded
geographical service area;
|X| the anticipated financial impact of the merger and
subsequent combination with LA Bank to create the
largest locally managed community bank in
northeastern Pennsylvania on the combined company's
future financial performance, including the
expectation of the NBT Board that the merger will be
accretive to the earnings of the combined company
within the first full year of operation;
|X| the anticipated effectiveness of the merger in
allowing NBT to enhance stockholder returns by
achieving efficiencies and cost savings through
combining the two Pennsylvania banks into one large
community bank, thus leveraging NBT's technology,
management, infrastructure, products, marketing, and
lines of business over a larger customer base, and
ongoing operational cost savings, including general
and administrative cost savings in areas such as
information and accounting systems,
telecommunications and professional fees, and
operational efficiencies due to combining
non-customer operations and due to critical mass in
areas such as bulk purchasing and insurance;
|X| the familiarity of the NBT Board with and review of Pioneer
American's business, operations, financial condition, earnings
and prospects, as well as those of NBT; in making its
determination, the NBT Board took into account the results of
NBT's due diligence review of Pioneer American's business;
|X| the knowledge of the NBT Board of the current financial
services industry environment, characterized by rapid
consolidation, increased opportunities for cross-industry
expansion, evolving trends in technology, and the need to
anticipate and to best position NBT in light of industry
trends;
|X| the complementary nature of the businesses of NBT, Lake Ariel
and Pioneer American, and the compatibility between the
operational functions of the two companies' banking
subsidiaries, NBT Bank, LA Bank and Pioneer American Bank,
especially in commercial and community banking, asset
management services, automobile lending, leasing, and mortgage
banking, and the belief that the merger should enable the
combined company to achieve many of its long-range goals more
easily and with less risk than NBT could achieve without the
merger;
|X| the financial terms of the merger and the belief of the NBT
Board that the cost of the merger in financial terms
represents a reasonable investment by NBT in its determination
to expand its banking franchise and the anticipated value to
be received by NBT and its stockholders as a result of its
investment in acquiring Pioneer American;
|X| the likelihood of the merger being approved by the appropriate
regulatory authorities;
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|X| the belief of the NBT Board that, while no assurances can be
given, it was likely that the merger would be completed and
that the business and financial benefits contemplated in
connection with the merger are likely to be achieved within a
reasonable time frame;
|X| the structure of the merger and the terms of the merger
agreement and the option agreement, including the fact that
the exchange ratio provides reasonable certainty as to the
number of shares of NBT's common stock NBT will issue in the
merger and that NBT intends the merger to qualify as a
transaction of the type that is generally tax-free for federal
income tax purposes and as a pooling of interests for
accounting purposes;
|X| the opinion of McConnell, Budd & Downes to the NBT Board that,
based on and subject to the considerations set forth in the
opinion, the exchange ratio was fair from a financial point of
view to the NBT stockholders;
|X| consideration of the effect of the merger upon NBT's other
constituencies, including the customers and communities served
by NBT and its employees, including management of NBT, and the
fact that the merger would allow the combined company to
continue its significant presence in the regions currently
served by NBT, including maintaining its headquarters in
Norwich.
NBT does not intend this discussion of the information and factors
considered by the NBT Board to be exhaustive, although this discussion does
include all material factors the NBT Board considered. In reaching its
determination to approve and recommend the merger agreement to the NBT
stockholders for their approval, the NBT Board did not assign any relative or
specific weights to the various factors considered, and individual directors of
NBT might have weighed factors differently.
RECOMMENDATION OF NBT'S BOARD OF DIRECTORS
The NBT Board is unanimous in its recommendation that NBT stockholders
vote FOR approval of the issuance of its common stock to the former Pioneer
American stockholders at the effective time of the merger and ratification of
the merger agreement and the merger.
RECOMMENDATION OF THE PIONEER AMERICAN BOARD AND PIONEER AMERICAN REASONS
FOR THE MERGER
The Pioneer American Board believes that the terms of the merger
agreement are fair and in the best interests of Pioneer American and its
stockholders. In the course of reaching its determination, the Pioneer American
Board consulted with legal counsel with respect to its legal duties and the
terms of the merger agreement. The Pioneer American Board consulted with its
financial advisor with respect to the financial aspects of the transaction and
fairness of the exchange ratio from a financial point of view, and with senior
management regarding, among other things, operations matters.
The following discussion of the information and factors considered by
the Pioneer American Board is not intended to be exhaustive, but does include
all material factors considered by the board. In reaching its decision to
approve the merger agreement, the Pioneer American Board considered the
following:
|X| NBT's broader range of products and services that will become
accessible to Pioneer American customers through the merger;
|X| Consideration offered to Pioneer American shareholders in
relation to the market value, book value, earnings per share
and projected earnings per share of Pioneer American;
|X| The quality of NBT and its operating history, including its
products and services;
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|X| Historical results of operations, current financial condition
and future prospects of Pioneer American and NBT;
|X| The presentation by Danielson Associates Inc. as to the
fairness of the exchange ratio provided for in the merger
agreement from a financial point of view to Pioneer American's
stockholders;
|X| Current operating environment, including the continued
consolidation and increasing competition in the banking and
financial services industries and the prospect for further
changes in these industries;
|X| The compatibility of the operating culture of NBT and Pioneer
American in community banking;
|X| The results of the due diligence investigations of NBT
undertaken by Pioneer American officers and representatives of
Pioneer American's financial advisor, including NBT's
investment portfolio, loan portfolio and adequacy of loan loss
reserves, funds management policies, employee benefit plans,
Year 2000 compliance matters and audit procedures;
|X| Detailed financial analysis, pro forma, and other information,
with respect to Pioneer American and NBT discussed by the
financial advisors;
|X| That NBT intends that John W. Reuther, President and Chief
Executive Officer of Pioneer American and its subsidiary,
Pioneer American Bank, would continue to function as President
and Chief Executive Officer of the subsidiary bank until such
time as NBT merges Pioneer American Bank into the successor
entity which will include all of the northeastern Pennsylvania
operations, at which time Mr. Reuther will become President
and Chief Operating Officer of that successor wholly-owned
subsidiary of NBT, thereby promoting continuity with respect
to the continuing operations of Pioneer American and providing
valuable input into the market area served by Pioneer
American;
|X| That three representatives of Pioneer American's Board would
become members of NBT's Board, thereby promoting continuity
with respect to the continuing operations of Pioneer American
and providing valuable input into the market area served by
Pioneer American;
|X| Anticipated cost savings and efficiencies available to the
combined company as a result of the merger;
|X| Prospects for continued local identity; and
|X| Other terms of the merger agreement and exhibits, including
that the transaction will be tax-free to Pioneer American and
its shareholders.
In reaching its determination to approve and recommend the merger
agreement, the Pioneer American Board did not assign any relative or specific
weights to the foregoing factors, and individual directors may have weighed
factors differently.
RECOMMENDATION OF PIONEER AMERICAN'S BOARD OF DIRECTORS
The Pioneer American Board believes that the merger is in the best
interests of Pioneer American and its stockholders. ACCORDINGLY, THE PIONEER
AMERICAN BOARD IS UNANIMOUS IN ITS RECOMMENDATION THAT STOCKHOLDERS VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
MERGER CONSIDERATION
In the merger, holders of Pioneer American common stock will receive
shares of NBT common stock as described in detail below.
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At the effective time of the merger each share of Pioneer American
common stock issued and outstanding immediately prior to the effective time will
automatically convert into and become the right to receive 1.805 shares of NBT
common stock.
The merger agreement provides for adjustment of the exchange ratio:
|X| either upwards or downwards to adjust for any NBT or Pioneer
American stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of
shares or the like;
|X| upwards but not downwards if all of the following occur:
(1) the average price per NBT share during the 20-day
trading period ending on the eighth day prior to the
day chosen as the effective date of the merger is
less than $15.00 and the NBT stock price decline,
expressed as a percentage, is more than 15 percentage
points greater than the weighted average stock price
decline of the index group, and
(2) Pioneer American exercises its right to cancel the
merger as a result of such price decline, subject to
NBT's right to require Pioneer American to complete
the merger if NBT agrees to increase the exchange
ratio so that a Pioneer American stockholder will
receive at least $27.08 worth of NBT stock for each
Pioneer American share, and
(3) NBT so elects to increase the exchange ratio.
We have provided some examples of how these termination provisions
would work using the stock prices of NBT, Pioneer American, and the index group
on December 7, 1999. See "The Issuance of NBT Common Stock in the Merger and
Ratification of the Merger Agreement -- Termination Upon a Decline in the Value
of NBT Common Stock."
At the effective time of the merger, holders of Pioneer American common
stock will cease to be stockholders of Pioneer American and will no longer have
any rights as Pioneer American stockholders, other than the right to receive any
dividend or other distribution with respect to Pioneer American common stock
with a record date occurring prior to the effective time and to receive the
applicable consideration in the merger. After the effective time, there will be
no transfers on Pioneer American's stock transfer books of any shares of Pioneer
American common stock.
OPINION OF NBT'S FINANCIAL ADVISOR
On December 7, 1999, McConnell, Budd & Downes, Inc. ("MB&D") delivered
its opinion to the NBT Board, that as of that date, the exchange ratio was fair,
from a financial point of view to NBT stockholders. The basis for MB&D's
opinion, which is unchanged, has been updated for the purposes of this joint
proxy statement/prospectus and appears in Appendix B. The exchange ratio was
negotiated based on consideration of numerous factors including the following:
|X| An analysis of the possible future earnings per share results
for the parties on both a combined and a stand-alone basis.
|X| Anticipated dilutive or accretive effects of the prospective
transaction to the earnings per share of NBT.
|X| Probable impact on dividends payout ratio as a result of the
contemplated transaction.
|X| Loan portfolios and relative asset quality as disclosed by the
parties.
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|X| Adequacy of reserves for loan and lease losses of the parties.
|X| Composition of the deposit bases of each of the parties.
|X| Analysis of the historical trading range, trading pattern and
relative liquidity of the common shares of each of the
parties.
|X| Accounting equity capitalization, the tangible equity
capitalization and the market capitalization of each of the
parties.
|X| Contemplation of other factors, including certain intangible
factors.
MB&D has acted as financial advisor to NBT on a contractual basis since
October 20, 1994 in connection with NBT's development and implementation of its
strategic plan and has assisted NBT in the evaluation of numerous hypothetical
affiliation opportunities with banks, thrifts and other financial institutions
since that date. With respect to the pending transaction involving Pioneer
American, MB&D advised NBT during the evaluation and negotiation process leading
up to the execution of the merger agreement and provided NBT with a number of
analyses as to a range of financially feasible exchange ratios. The
determination of the applicable exchange ratio was arrived at in an arms-length
negotiation between NBT and Pioneer American in a process in which MB&D advised
NBT and participated directly in the negotiations.
MB&D was retained based on its qualifications and experience in the
financial analysis of banking and thrift institutions generally, its knowledge
of the New York and Pennsylvania banking markets in particular, as well as its
experience with merger and acquisition transactions involving banking
institutions. As a part of its investment banking business, which is focused
exclusively on financial services industry participants, MB&D is continually
engaged in the valuation of financial institutions and their securities in
connection with its equity brokerage business generally and mergers and
acquisitions in particular. Members of the Corporate Finance Advisory Group of
MB&D have extensive experience in advising financial institution clients on
mergers and acquisitions. In the ordinary course of its business as an NASD
broker-dealer, MB&D may, from time to time, purchase securities from or sell
securities to NBT or Pioneer American and as a market maker in securities. MB&D
may from time to time have a long or short position in, and buy or sell debt or
equity securities of NBT or Pioneer American for its own account or for the
accounts of its customers. In addition, in the ordinary course of business, the
employees of MB&D may have direct or indirect investments in the debt or equity
securities of either or both NBT or Pioneer American.
The full text of the opinion, which sets forth assumptions made,
matters considered and limits on the review undertaken, is attached hereto as
Appendix B. MB&D urges that all NBT shareholders read the opinion in its
entirety and the joint proxy statement/prospectus in its entirety. The opinion
of MB&D is directed only to the exchange ratio at which shares of Pioneer
American common stock may be exchanged for shares of NBT common stock. The
opinion of MB&D does not constitute a recommendation to any holder of NBT common
stock as to how such holder should vote at the NBT annual meeting. The summary
of the opinion and the matters considered in the MB&D analysis set forth in this
joint proxy statement/prospectus is qualified in its entirety by reference to
the text of the opinion itself. The opinion is necessarily based upon conditions
as of the date of the opinion and upon information made available to MB&D
through the date thereof. No limitations were imposed by the NBT Board upon MB&D
with respect to the investigations made, matters considered or procedures
followed in the course of rendering its opinions.
Materials Reviewed by MB&D:
In connection with the rendering and updating of its opinion, MB&D
reviewed the following documents and considered the following subjects:
|X| The merger agreement detailing the pending transaction;
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|X| The joint proxy statement/prospectus in substantially the form
to be mailed to NBT shareholders;
|X| Pioneer American Annual Reports to stockholders for 1996, 1997
and 1998;
|X| Pioneer American Annual Reports on Form 10-K for 1996, 1997
and 1998;
|X| Related financial information for the three calendar years
ended December 31, 1996, 1997, and 1998 for Pioneer American;
|X| Pioneer American Quarterly Report on Form 10-Q and related
unaudited financial information for the first three quarters
of 1999;
|X| Pioneer American's press release concerning unaudited results
for the calendar years 1998 and 1999;
|X| NBT Annual Reports to Stockholders for 1996, 1997 and 1998;
|X| NBT Annual Reports on Form 10-K and related financial
information for the calendar years ended 1996, 1997 and 1998;
|X| NBT Quarterly Reports on Form 10-Q and related unaudited
financial information for the first three quarters of 1999;
|X| NBT's press release concerning unaudited results for the
calendar years 1998 and 1999;
|X| Internal financial information and financial forecasts,
relating to the business, earnings, cash flows, assets and
prospects of the respective companies furnished to MB&D by
Pioneer American and NBT respectively;
|X| Discussions with members of the senior management of Pioneer
American concerning the past and current results of operations
of Pioneer American, its current financial condition and
management's opinion of its future prospects;
|X| Discussions with members of the senior management of NBT
concerning the past and current results of operations of NBT,
its current financial condition and management's opinion of
its future prospects;
|X| The historical record of reported prices, trading volume and
dividend payments for both Pioneer American and NBT common
stock;
|X| Based primarily on anecdotal information, the current state of
and future prospects for the economy of New York and
northeastern Pennsylvania generally and the relevant market
areas for Pioneer American and NBT in particular;
|X| Specific merger analysis models developed by MB&D to evaluate
potential business combinations of financial institutions
using both historical reported information and projected
information for both Pioneer American and NBT and the results
of application of these models;
|X| The reported financial terms of selected recent business
combinations of financial institutions for purposes of
comparison to the pending transaction;
|X| Such other studies and analyses as MB&D considered appropriate
under the circumstances associated with this particular
transaction.
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The opinion of MB&D takes into account its assessment of general
economic, market and financial conditions and its experience in other
transactions involving participants in the financial services industry, as well
as its experience in securities valuation and its knowledge of the banking
industry generally. For purposes of reaching its opinion, MB&D has assumed and
relied upon the accuracy and completeness of the information provided to it or
made available by Pioneer American and NBT and does not assume any
responsibility for the independent verification of such information. With
respect to financial forecasts made available to MB&D it is assumed by MB&D that
they were prepared on a reasonable basis and reflect the best currently
available estimates and good faith judgments of the management of Pioneer
American and NBT respectively, as to the future performance of Pioneer American
and NBT. MB&D has also relied upon assurances of the management of Pioneer
American and NBT that they were not aware of any facts or of the omission of any
facts that would make the information or financial forecasts provided to MB&D
incomplete or misleading. In the course of rendering its opinion, MB&D has not
completed any independent valuation or appraisal of any of the assets or
liabilities of either Pioneer American or NBT and has not been provided with
such valuations or appraisals from any other source.
The following is a summary of the material analyses employed by MB&D in
connection with rendering its written opinion. Given that it is a summary, it
does not purport to be a complete and comprehensive description of all the
analyses performed, or an enumeration of every matter considered by MB&D in
arriving at its opinion. The preparation of a fairness opinion is a complicated
process, involving a determination as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances. Therefore, such an opinion is not readily susceptible
to a summary description. In arriving at its fairness opinion, MB&D did not
attribute any particular weight to any one specific analysis or factor
considered by it and made qualitative as well as quantitative judgments as to
the significance of each analysis and factor. Therefore, MB&D believes that its
analyses must be considered as a whole and feels that attributing undue weight
to any single analysis or factor considered could create a misleading or
incomplete view of the process leading to the formation of its opinion. In its
analyses, MB&D has made certain assumptions with respect to banking industry
performance, general business and economic conditions and other factors, many of
which are beyond the control of management of either Pioneer American or NBT.
Estimates, which are referred to in the analyses are not necessarily indicative
of actual values or predictive of future results or values, which may vary
significantly from those set forth. In addition, analyses relating to the values
of businesses do not purport to be appraisals or to reflect the prices at which
businesses might actually be sold. Accordingly, such analyses and estimates are
inherently subject to uncertainty and MB&D does not assume responsibility for
the accuracy of such analyses or estimates.
Lake Ariel Transaction. On August 16, 1999, NBT agreed to acquire Lake
Ariel Bancorp, Inc. MB&D has reviewed the agreement with Lake Ariel and issued a
fairness opinion to NBT's Board of Directors concerning this transaction. MB&D
acted as NBT's financial advisor throughout the negotiations with Lake Ariel.
The agreement with Lake Ariel and the expected pro forma financials were
included in MB&D's analysis concerning the Pioneer American transaction.
Analysis of the Anticipated Merger and the Fixed Exchange Ratio:
The consideration of 1.805 shares of NBT common stock, valued at the
last sale price of NBT on the day prior to the announcement of the transaction
($16.25) represents the following values and multiples:
Total Transaction Value: $85,337,277
Deal Premium to Pioneer American's last trade: 5.70%
Deal Price / EPS for the last 12 months 20.95x
Deal Price / Tangible Book as of 9/30/99 2.68x
Contribution Analysis:
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The following table reflects the acquisition of Lake Ariel on February
17, 2000, and is based on reported financial data for Pioneer American, NBT and
Lake Ariel as of September 30, 1999 and the per share price of NBT as of
December 6, 1999. Under those circumstances, the relative contributions of the
parties to the pro forma NBT on a pooling basis would have been as follows:
<TABLE>
<CAPTION>
PRO FORMA CONTRIBUTION TABLE
As of 9-30-99
- --------------------------------------------- -------------------------- -------------------------
Item NBT PIONEER AMERICAN
- --------------------------------------------- -------------------------- -------------------------
<S> <C> <C>
Proposed Ownership 77.3% 22.7%
- --------------------------------------------- -------------------------- -------------------------
Assets 82.1% 17.9%
- --------------------------------------------- -------------------------- -------------------------
Loans 83.1% 16.9%
- --------------------------------------------- -------------------------- -------------------------
Deposits 82.5% 17.5%
- --------------------------------------------- -------------------------- -------------------------
Equity 83.6% 16.4%
- --------------------------------------------- -------------------------- -------------------------
Tangible Equity 83.1% 16.9%
- --------------------------------------------- -------------------------- -------------------------
Estimated Net Income of Combined Company 80.7% 19.3%
for fiscal year 2000.
- --------------------------------------------- -------------------------- -------------------------
Estimated Net Income of Combined Company 76.7% 23.3%
for fiscal year 2001.
- --------------------------------------------- -------------------------- -------------------------
</TABLE>
Specific Acquisition Analysis:
MB&D employs a proprietary analytical model to examine transactions
involving banking companies. The model uses forecast earnings data, selected
current period balance sheet and income statement data, current market and
trading information and a number of assumptions as to interest rates for
borrowed funds, the opportunity cost of funds, discount rates, dividend streams,
effective tax rates and transaction structures. The model inquires into the
likely economic feasibility of a given transaction at a given price level or
specified exchange rate while employing a specified transaction structure. The
model also permits evaluation of various levels of potential non-interest
expense savings which might be achieved along with various potential
implementation time tables for such savings, as well as the possibility of
revenue enhancement opportunities which may arise in a given transaction.
Utilizing this model, MB&D prepared pro forma analyses of the financial
impact of the merger to the NBT stockholders. MB&D compared estimated earnings
per share of NBT on a stand alone basis for fiscal year 2000, 2001 and 2002 to
the estimated earnings per share of the common stock of the combined company on
a pro forma basis for the same fiscal years. MB&D's analysis illustrates that
the merger will be dilutive to stockholders of NBT on an earnings per share
basis in fiscal year 2000, and becomes accretive to NBT stockholders in fiscal
year 2001. The transaction remains accretive to stockholders of NBT in fiscal
year 2002.
Analysis of Other Comparable Transactions:
MB&D is reluctant to place emphasis on the analysis of comparable
transactions as a valuation methodology due to what it considers to be inherent
limitations of the application of the results to specific cases. MB&D believes
that such analysis fails to adequately take into consideration such factors as:
|X| Material differences in the underlying capitalization of the
comparable institutions which are being acquired;
|X| Differences in the historic earnings (or loss) patterns
recorded by the compared institutions which can depict a very
different trend than might be implied by examining only recent
financial results;
|X| Failure to exclude non-recurring profit or loss items from the
last twelve months' earnings streams of target companies which
can distort apparent earnings multiples;
|X| Material differences in the form or forms of consideration used to
complete the transaction;
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|X| Differences between the planned method of accounting for the
completed transaction;
|X| Factors such as: the relative population, business and economic
demographics of the acquired entity's markets as compared or
contrasted to such factors for the markets in which comparable
companies are doing business.
With these reservations in mind, we nonetheless examined statistics
associated with 46 transactions (excluding the subject transaction) involving
commercial banks. The following criteria was utilized to create the sample:
|X| Acquired institutions are all commercial banks.
|X| Announced between June 1, 1998 and December 7, 1999.
|X| Announced deal value greater than $50 million and less than $100
million.
The table which follows permits a comparison of the mean and median
values for two selected statistics arising from the list of 46 transactions
evaluated with the "comparable" statistics calculated for the transaction which
is described in this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
"Comparable" statistics as of the announcement date:
- ---------------------------------------- -------------------------------------- -------------------------------------
Compared statistics Announced transaction price/tangible Announced transaction price/
book value trailing 12 months earnings
- ---------------------------------------- -------------------------------------- -------------------------------------
<S> <C> <C>
NBT/Pioneer American 2.68x 20.95x
- ---------------------------------------- -------------------------------------- -------------------------------------
Sample (46 transactions)
Mean 3.07x 24.5x
Median 3.08x 21.7x
- ---------------------------------------- -------------------------------------- -------------------------------------
1999 (29 transactions)
Mean 2.96x 23.7x
Median 2.85x 21.5x
- ---------------------------------------- -------------------------------------- -------------------------------------
1998 (17 transactions)
Mean 3.23x 26.0x
Median 3.19x 23.7x
- ---------------------------------------- -------------------------------------- -------------------------------------
PA, NJ & NY (8 transactions)
Mean 3.02x 26.6x
Median 2.93x 25.0x
- ---------------------------------------- -------------------------------------- -------------------------------------
</TABLE>
COMPENSATION OF MB&D
Pursuant to a letter agreement with NBT dated December 7, 1999, MB&D
will receive a fixed fee of $375,000. This fee will be divided into several
payments, which correspond with the successful completion of specific events.
MB&D was paid $75,000 after the execution of the merger agreement and will be
paid an additional $150,000 upon issuance of its opinion which will be included
as an exhibit to this joint proxy statement/prospectus. Payment of the balance
of the fee will be conditioned on closing of the transaction.
The fee payable to MB&D represents compensation for services rendered
in connection with the analysis of the transaction, participation in the
negotiations, participation in the drafting of documentation, and for the
rendering of its Opinion. In addition, NBT has agreed to reimburse MB&D for its
reasonable out-of-pocket expenses incurred in connection with the transaction.
NBT also has agreed to indemnify MB&D and its directors, officers and employees
against certain losses, claims, damages and liabilities relating to or arising
out of its engagement, including liabilities under the federal securities laws.
MB&D has filed a written consent with the SEC relating to the inclusion
of its fairness opinion and the reference to such opinion and to MB&D in the
registration statement in which this joint proxy statement/prospectus is
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included. In giving such consent, MB&D did not admit that it comes within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the rules and regulations of the SEC thereunder, nor did MB&D
thereby admit that it is an expert with respect to any part of such Registration
Statement within the meaning of the term "expert" as used in the Securities Act
of 1933 as amended, or the rules and regulations of the SEC thereunder.
OPINION OF PIONEER AMERICAN'S FINANCIAL ADVISOR
Pioneer American retained Danielson Associates Inc. ("Danielson
Associates") to advise the Pioneer American board of directors as to its "fair"
sale value and the fairness to its shareholders of the financial terms of the
offer to be acquired by NBT. Danielson Associates is regularly engaged in the
valuation of banks, bank holding companies, and thrifts in the connection with
mergers, acquisitions, and other securities transactions; and has knowledge of,
and experience with, Pennsylvania and New York banking markets and banking
organizations operating in those markets. Danielson Associates was selected by
Pioneer American because of its knowledge of, expertise with, and reputation in
the financial services industry.
In such capacity, Danielson Associates reviewed the merger agreement
with respect to the pricing and other terms and conditions of the merger, but
the decision as to accepting the offer was ultimately made by the board of
directors of Pioneer American. Danielson Associates rendered its oral opinion to
the Pioneer American board of directors, which it subsequently confirmed in
writing, that as of the date of the opinion, the financial terms of the NBT
offer were "fair" to Pioneer American and its shareholders. No limitations were
imposed by the Pioneer American Board of Directors upon Danielson Associates
with respect to the investigation made or procedures followed by it in arriving
at its opinion.
In arriving at its opinion, Danielson Associates
|X| reviewed certain business and financial information relating
to Pioneer American and NBT including annual reports for the
fiscal year ended December 31, 1998; call report data from
1990 to 1999; and the Annual Reports on Form 10-K and the
Quarterly Reports on Form 10-Q for 1998 and 1999;
|X| discussed the past and current operations, financial condition
and prospects of NBT with its senior executives;
|X| analyzed the pro forma impact of the merger on NBT's earnings
per share, capitalization, and financial ratios;
|X| reviewed the reported prices and trading activity for the NBT
common stock and compared it to similar bank holding
companies;
|X| reviewed and compared the financial terms, to the extent
publicly available, with comparable transactions;
|X| reviewed the merger agreement and certain related documents;
and
|X| considered such other factors as were deemed appropriate.
Danielson Associates did not obtain any independent appraisal of assets
or liabilities of Pioneer American or NBT or their respective subsidiaries.
Further, Danielson Associates did not independently verify the information
provided by Pioneer American or NBT and assumed the accuracy and completeness of
all such information.
In arriving at its opinion, Danielson Associates performed a variety of
financial analyses. Danielson Associates believes that its analyses must be
considered as a whole and that consideration of portions of such analyses could
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create an incomplete view of Danielson Associates' opinion. The preparation of a
fairness opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analysis or summary description.
In its analyses, Danielson Associates made certain assumptions with
respect to industry performance, business and economic conditions, and other
matters, many of which were beyond Pioneer American's or NBT's control. Any
estimates contained in Danielson Associates analyses are not necessarily
indicative of the future results of value, which may be significantly more or
less favorable than such estimates. Estimates of the value of companies do not
purport to be appraisals or necessarily reflect the prices at which companies or
their securities may actually be sold.
The following is a summary of selected analyses considered by Danielson
Associates in connection with its opinion letter.
PRO FORMA MERGER ANALYSES
Danielson Associates analyzed the changes in the amount of earnings and
book value represented by the receipt of about $87.5 million for all of the
outstanding shares of Pioneer American common stock and options to purchase
common stock, which will be paid in NBT common stock or options to purchase NBT
common stock. The analysis evaluated, among other things, possible dilution in
earnings and capital per share for NBT common stock.
COMPARABLE COMPANIES
To determine the "fair" value of the NBT common stock to be exchanged
for the common stock of Pioneer American, NBT was compared to eleven
publicly-traded bank holding companies ("comparable banks" or the "comparative
group"). These comparable banks had assets in the $1 billion to $3 billion
range, no extraordinary characteristics and were located in New Jersey, New York
and Pennsylvania.
<TABLE>
<CAPTION>
SUMMARY AND DESCRIPTION OF COMPARABLE BANKS
ASSETS* HEADQUARTERS
(in mill.)
COMPARABLE BANKS**
<S> <C> <C>
Community Bank System $1,774 DeWitt, N.Y.
Harleysville National 1,615 Harleysville, Pa.
Main Street 1,403 Reading, Pa.
National Penn 2,252 Boyertown, Pa.
Omega 1,058 State College, Pa.
Premier National 1,591 Lagrangeville, N.Y.
Sterling Financial 1,040 Lancaster, Pa.
TrustCo 2,385 Schenectady, N.Y.
U.S.B. 1,629 Orangeburg, N.Y.
United National 2,053 Bridgewater, N.J.
Yardville 1,056 Mercerville, N.J.
</TABLE>
*September 30, 1999.
**Publicly-traded with assets between $1 billion and $3 billion in New Jersey,
New York and Pennsylvania.
Source: SNL Securities LC, Charlottesville, Virginia.
Danielson Associates compared NBT's
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|X| stock price as of December 6, 1999 equal to 11.8 times
earnings and 171% of book;
|X| dividend yield based on trailing four quarters as of September
30, 1999 and stock price as of December 6, 1999 of 4.06%;
|X| equity as of September 30, 1999 of 9.28% of assets;
|X| nonperforming assets including loans 90 days past due as of
September 30, 1999 equal to .27% of total assets;
|X| return on average assets during the trailing four quarters
ended September 30, 1999 of 1.44% and
|X| return on average equity during the same period of 14.62%,
with the medians for the comparable banks.
The comparable medians were
|X| stock price equal to 14.0 times earnings and 196% of book;
|X| dividend yield of 3.29%;
|X| equity of 6.40% of assets;
|X| .35% of assets nonperforming;
|X| return on average assets of 1.22% and
|X| return on average equity of 14.98%.
Danielson Associates also compared other income, expense and balance
sheet information of such companies with similar information about NBT.
<TABLE>
<CAPTION>
NBT - COMPARABLE BANKS SUMMARY
Comparable Banks
NBT Medians
INCOME
<S> <C> <C>
Net income/Avg. Assets 1.444 % 1.22 %
Net oper. income*/Avg. Assets 2.45 2.047
Return on average equity 14.62 14.98
BALANCE SHEET
Equity/Assets 9.28 % 6.40 %
NPAs**/Assets .27 .35
STOCK PRICE
Price/Earnings 11.8 X 14.0 X
Price/Book 171 % 196 %
Dividend yield 4.06 % 3.29 %
Payout ratio 45 % 46 %
Shares traded*** 9,786 11,440
</TABLE>
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*Net interest income plus noninterest income less operating expense.
**Nonperforming assets including loans 90 days past due and still accruing.
***Average daily volume in 1999 through December 6, 1999.
Source: SNL Securities LC, Charlottesville, Virginia.
COMPARABLE TRANSACTION ANALYSIS
Danielson Associates compared the consideration to be paid in the
merger to the latest twelve months earnings and equity capital of Pioneer
American with earnings and capital multiples paid in acquisitions of banks
through December 6, 1999 in Connecticut, New Jersey, New York and Pennsylvania.
Of these, the most applicable recent transactions included Hudson United
Bancorp's purchase of JeffBanks, Inc., NBT Bancorp Inc.'s acquisition of Lake
Ariel Bancorp, Inc., Staten Island Bancorp, Inc.'s purchase of First State
Bancorp, Summit Bancorp's acquisition of NMBT Corp., Tompkins Trustco, Inc.'s
purchase of Letchworth Independent Bankshares Corporation and Webster Financial
Corp.'s acquisition of New England Community Bancorp, Inc. At the time Danielson
Associates made its analysis, the consideration to be paid in the merger was
274% of Pioneer American's September 30, 1999 book value and 21.3 times reported
earnings for the trailing four quarters as of September 30, 1999. This compares
to the median multiples of 251% of book value and 23.0 times earnings for the
six most applicable recent transactions.
DISCOUNTED FUTURE EARNINGS AND DISCOUNTED DIVIDENDS ANALYSIS
Danielson Associates applied present value calculations to Pioneer
American's estimated future earnings and dividend stream under several specific
growth and earnings scenarios. This analysis considered, among other things,
scenarios for Pioneer American as an independent institution and as part of
another banking organization. The projected dividend streams and terminal
values, which were based on a range of earnings multiples, were then discounted
to present value using discount rates based on assumptions regarding the rates
of return required by holders or prospective buyers of Pioneer American common
stock.
OTHER ANALYSIS
In addition to performing the analyses summarized above, Danielson
Associates also considered the general market for bank mergers, the historical
financial performance of Pioneer American and NBT, the market positions of both
banks and the general economic conditions and prospects of those banks.
No company or transaction used in this composite analysis is identical
to Pioneer American or NBT. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather it involves complex consideration and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading values of
the company or companies to which they are being compared.
The summary set forth above does not purport to be a complete
description of the analyses and procedures performed by Danielson Associates in
the course of arriving at its opinions. In payment for its services as the
financial advisor to Pioneer American, Danielson Associates is to be paid an
estimated fee of about $437,500, based upon a fee equal to 0.5% of the total
transaction price at the time of closing, reduced by any hourly fees already
received.
The full text of the opinion of Danielson Associates dated as of
December 7, 1999, which sets forth assumptions made and matters considered, is
attached hereto as Appendix C of this joint proxy statement/prospectus. Pioneer
American shareholders are urged to read this opinion in its entirety. Danielson
Associates' opinion is directed only to the consideration to be received by
Pioneer American shareholders in the merger and does not constitute a
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recommendation to any Pioneer American shareholder as to how such shareholder
should vote at the Shareholders Meeting.
OTHER INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER
In considering the independent recommendations of the NBT Board and the
Pioneer American Board with respect to the merger, Pioneer American stockholders
should be aware that officers and directors of Pioneer American have interests
in the merger that are different from, or in addition to, the interests of the
stockholders of Pioneer American generally. The NBT Board and the Pioneer
American Board were aware of such interests and considered them, among other
matters, in approving the merger agreement and the matters contemplated by the
merger agreement, including the merger.
As of December 31, 1999, the directors and executive officers of
Pioneer American owned an aggregate of approximately 482,385 shares of Pioneer
American common stock and held options to purchase an aggregate of approximately
45,125 shares of Pioneer American common stock at a weighted average exercise
price of approximately $11.35. Under the terms of the merger agreement, Pioneer
American's directors and executive officers will receive the same consideration
for their shares of Pioneer American common stock as the other Pioneer American
stockholders. Upon completion of the merger, all outstanding options to purchase
Pioneer American common stock will convert into options to purchase shares of
NBT common stock. See "The Issuance of NBT Common Stock in the Merger and
Ratification of the Merger Agreement -- Pioneer American Stock Options."
REUTHER EMPLOYMENT AGREEMENT. NBT, as the surviving corporation in the
merger, will enter into an employment agreement with John W. Reuther, President
and Chief Executive Officer and a director of Pioneer American, under which NBT
will cause Pioneer American Bank, which will be a wholly-owned subsidiary of NBT
following the merger, to employ Mr. Reuther as its President and Chief Operating
Officer or as the President and Chief Operating Officer of the northeastern
Pennsylvania operations of its successor entity. In carrying out his duties, Mr.
Reuther will report to the Chairman and Chief Executive Officer of the
northeastern Pennsylvania operations of NBT and will oversee and direct the
operations of Pioneer American Bank or the northeastern Pennsylvania operations
of any successor entity to Pioneer American Bank. The employment agreement
becomes effective when the merger is completed and terminates three years later.
Mr. Reuther's employment agreement provides that he will receive a
salary of not less than $230,000 per year, subject to increases in accordance
with NBT's compensation policies. During the employment term, Mr. Reuther will
be entitled to participate in all of the compensation and benefit plans made
available generally to senior executives of NBT. During the term of Mr.
Reuther's employment,
|X| he will be entitled to the use of an automobile owned by
Pioneer American Bank, the make, model and year of which
automobile is appropriate to an officer of Mr. Reuther's rank
employed by NBT or its affiliates;
|X| NBT or an affiliate of NBT will reimburse Mr. Reuther for dues
and assessments incurred by him in relation to his membership
at his country club; and
|X| NBT or an affiliate of NBT will maintain the life insurance
paid by Pioneer American Bank on Mr. Reuther's life for the
benefit of his designated beneficiary(ies) at no less than the
level of insurance maintained as of September 30, 1999.
In addition, NBT will assume and continue in effect with respect to Mr. Reuther
the Pioneer American Bank Executive Retirement Plan, dated October 25, 1988, and
the Split Dollar Agreement/Key Executive Equity Program, dated February 15,
1994, as restated April 16, 1999. In return, Mr. Reuther has renounced any
entitlement to benefits under any supplemental executive retirement plan to
which he would otherwise be entitled as an executive or affiliate of NBT.
Additionally, Mr. Reuther will be eligible to be considered for performance
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bonuses of up to 75% of salary, primarily on the basis of the performance of
Pioneer American Bank or of the northeastern Pennsylvania operations of any
successor entity to Pioneer American Bank, and secondarily on the basis of the
performance of NBT. The benefits described in this paragraph will continue
throughout the employment term unless NBT terminates Mr. Reuther's employment
for cause, Mr. Reuther terminates the agreement without good reason, or Mr.
Reuther dies or becomes disabled. Mr. Reuther will agree that from the
commencement date of his employment agreement until the second anniversary of
the termination date of the agreement he will not compete with NBT, Pioneer
American Bank, or their affiliates within a composite area defined by radii of
25 miles from the head office of Pioneer American Bank, the authorized branches
of Pioneer American Bank as they may exist from time to time, and each branch of
a depository institution affiliated with Pioneer American Bank for which Mr.
Reuther has or has had significant executive or managerial responsibilities.
RELEASES. At the effective time of the merger, Messrs. Reuther and
James E. Jackson, Executive Vice President of Pioneer American Bank, and Ms.
Patricia A. Cobb, Executive Vice President of Pioneer American Bank, will
execute unconditional releases in favor of NBT, Pioneer American and Pioneer
American Bank from any claims, actions, or liabilities they, respectively, might
have against NBT, Pioneer American or Pioneer American Bank. In exchange for the
releases, NBT will tender to each a change-in-control agreement, and in the case
of Mr. Reuther, in addition an employment agreement, described in preceding
paragraphs.
CHANGE-IN-CONTROL AGREEMENTS. NBT has entered into change-in-control
agreements with Messrs. Reuther and Jackson and Ms. Cobb. Each of the agreements
has a term of three years, which extends for an additional year on each
successive anniversary of the agreement. The agreements provide that if, within
24 months from the date of an event constituting a change in control of NBT, the
employment of the named employee is terminated (1) by NBT because of the
employee's disability, (2) by NBT without cause, or (3) by the employee with
good reason (as defined below), the terminated employee will be entitled to a
severance payment and other benefits. If terminated because of disability, the
employee will be entitled to receive benefits in accordance with NBT's long-term
disability income insurance plan. If terminated without cause or with good
reason, NBT will pay the terminated employee his full base salary plus
year-to-date accrued vacation through the date of termination plus severance pay
in an amount equal to the product of his base salary multiplied by 2.99, in the
case of Mr. Reuther, or 2.0, in the cases of Mr. Jackson and Ms. Cobb. Base
salary means the employee's average annual compensation includible in gross
income for federal income tax purposes for the five years preceding the year in
which the change in control occurs.
The agreement further provides that, in the event that any payments or
benefits the named executive becomes entitled to under the agreement or any
other payments or benefits received or to be received by the named executive in
connection with a change in control of NBT or the named executive's termination
of employment will be subject to an excise tax under section 4999 of the
Internal Revenue Code of 1986, NBT will pay the named executive an additional
amount so that the net amount retained by the named executive, after deduction
of the excise tax on the severance benefits and after deduction for the
aggregate of any federal, state, or local income tax and excise tax upon such
additional payment amount, will equal the severance payments under the
change-in-control agreement.
A change in control of NBT means:
|X| a change in control that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A as in
effect on the date of the agreement under the Securities
Exchange Act of 1934, upon a person's becoming the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 30 percent or more of the combined
voting power of NBT's voting securities;
|X| during any period of two consecutive years, individuals who at
the beginning of such period constitute the NBT Board cease
for any reason to constitute at least a majority of the Board
unless the election, or the nomination for election by the NBT
stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who
were directors at the beginning of the period;
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|X| there shall be consummated any consolidation or merger of NBT
in which NBT is not the continuing or surviving corporation or
any sale, lease, exchange, or other transfer of all, or
substantially all of the assets of NBT; or
|X| approval by the stockholders of NBT of any plan or proposal
for the liquidation or dissolution of NBT.
The change in control agreements define termination for cause as
termination because, and only because, the named employee committed an act of
fraud, embezzlement, or theft constituting a felony or an act intentionally
against the interests of NBT which causes NBT material injury.
Termination of the named employee for good reason means:
|X| a change in the employee's status or position(s) with NBT,
which in the employee's reasonable judgment, does not
represent a promotion from the employee's status or position
as in effect immediately prior to the change in control, or a
change in the employee's duties or responsibilities which, in
the employee's reasonable judgment, is inconsistent with such
status or position, or any removal of the employee from, or
any failure to reappoint or reelect the employee to, such
position;
|X| a reduction by NBT in the employee's base salary as in effect
immediately prior to the change in control;
|X| the failure by NBT to continue in effect any employee benefit
plan in which the employee was participating at the time of
the change in control of NBT other than as a result of the
normal expiration of the plan in accordance with its terms as
in effect at the time of the change in control, or the taking
of any action, or the failure to act, by NBT which would
adversely affect the employee's continued participation in the
plan on at least as favorable a basis to the employee as is
the case on the date of the change in control or which would
materially reduce the employee's benefits in the future under
any of the plans or deprive the employee of any material
benefit enjoyed by the employee at the time of the change in
control;
|X| the failure by NBT to provide and credit the employee with the
number of paid vacation days to which the employee was then
entitled in accordance with NBT's normal vacation policy as in
effect immediately prior to the change in control;
|X| NBT's requiring the employee to be based anywhere other than
where his office is located immediately prior to the change in
control, except for required business travel;
|X| NBT's failure to obtain from any successor its express assent
to assume and agree to perform the change in control agreement
in the same manner and to the same extent as NBT would be
required to perform if no succession had taken place;
|X| any purported termination by NBT of the employee's employment
which is not effected in accordance with the express
notice provisions of the change in control agreement; or
|X| any refusal by NBT to continue to allow the employee to attend
to matters or engage in activities not directly related to the
business of NBT which, prior to the change in control, the
employee was permitted by the board to attend or engage in.
STOCK OPTIONS. Options to purchase Pioneer American common stock, which
their holders have not exercised prior the effective time of the merger, will
automatically convert into options to purchase shares of common stock of NBT
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following the merger, and NBT will assume each such option subject to the terms
and conditions set forth in Pioneer American's stock option plans.
Each such converted stock option will convert into a replacement option
to acquire a number of shares of NBT common stock equal to (rounded down to the
nearest whole number of shares) (a) the number of shares of Pioneer American
common stock subject to such converted option as of the effective time
multiplied by (b) the exchange ratio for the merger. The exercise price per
share (rounded down to the nearest whole cent) will equal (x) the aggregate
exercise price under such converted option for all of the shares of Pioneer
American common stock subject to such converted option at the effective time
divided by (y) the number of shares of NBT common stock subject to such
replacement option.
Each Pioneer American 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 "The Issuance of
NBT Common Stock in the Merger and Ratification of the Merger Agreement --
Pioneer American Stock Options."
COMPOSITION OF NBT'S BOARD FOLLOWING THE MERGER. Following the merger
and assuming the election of the nominees proposed to be elected at the NBT
annual meeting and subject to the fiduciary duties of its directors to NBT, NBT
will have a Board of Directors composed of fifteen individuals. The Board will
include the twelve current members of the NBT Board, including three former Lake
Ariel Board members, Messrs. John G. Martines, Bruce D. Howe, and William C.
Gumble who joined the NBT Board upon completion of the merger between NBT and
Lake Ariel that closed on February 17, 2000 and Messrs. Joseph G. Nasser, Gene
E. Goldenziel and Richard Chojnowski, each of whom is currently a director of
Pioneer American. In the merger agreement NBT has agreed that, subject to the
fiduciary duty of its directors to NBT, NBT will cause these three individuals
to be elected or appointed directors of NBT.
DIRECTORS AND OFFICERS INDEMNIFICATION. As described in "The Issuance
of NBT Common Stock in the Merger and Ratification of the Merger Agreement --
Conduct of Business Pending Completion of the Merger -- Indemnification," the
merger agreement provides that following the merger NBT will take no action to
abrogate or diminish any right to indemnification accorded under Pioneer
American's Articles of Incorporation or bylaws existing in favor of the current
or former directors or officers of Pioneer American. The merger agreement also
provides that following the effective time of the merger and to the extent
permitted by law, all rights to such indemnification will survive completion of
the merger, and NBT will honor such obligations in accordance with their terms
with respect to events, acts, or omissions occurring prior the effective time of
the merger.
STOCK OPTION AGREEMENT
The following is a description of the material terms of the stock
option agreement. We urge all stockholders of NBT and Pioneer American to read
the stock option agreement in its entirety for a complete description of the
terms of the agreement. We have previously filed a copy of the stock option
agreement with the SEC.
As a condition to NBT's willingness to enter into the merger agreement,
Pioneer American entered into the Stock Option Agreement, dated as of December
7, 1999, with NBT. Under the stock option agreement, Pioneer American granted
NBT an option to purchase up to 569,997 shares of Pioneer American common stock,
which was approximately 19.9% of the number of shares of Pioneer American common
stock outstanding as of December 7, 1999. The exercise price of the stock option
is $24.00 per share, subject to adjustment under specified circumstances.
Parties to merger agreements often enter into arrangements such as the
stock option agreement in connection with corporate mergers and acquisitions in
an effort to increase the likelihood of completion of the transactions in
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accordance with their terms, and to compensate the recipient of the option for
its efforts and expenses, losses and opportunity costs in connection with the
transactions if the merger does not occur due to circumstances involving an
acquisition or potential acquisition of the option issuer by a third party. The
stock option agreement may have the effect of discouraging offers by third
parties to acquire Pioneer American 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 Pioneer American pursuant to the
merger agreement.
The stock option will become exercisable in whole or in part only if a
triggering event occurs with respect to Pioneer American before the stock option
terminates. For purposes of the stock option agreement, the term "triggering
event" means any of the following events or transactions occurring after
December 7, 1999:
|X| Pioneer American or Pioneer American Bank, without having
received NBT's prior written consent, shall have entered into
an agreement to engage in an acquisition transaction (as
defined below) with any person other than NBT or any of its
subsidiaries;
|X| any person other than NBT or NBT Bank shall have acquired
beneficial ownership or the right to acquire beneficial
ownership of 10 percent or more of the outstanding shares of
Pioneer American's common stock;
|X| the stockholders of Pioneer American shall have voted on and
failed to approve the merger agreement at a special meeting
held for that purpose or any adjournment or postponement of
the meeting, if prior to the meeting there was a public
announcement that any person (other than NBT or NBT Bank)
shall have made a bona fide proposal to engage in an
acquisition transaction;
|X| Pioneer American's Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any
manner adverse to NBT its recommendation that the stockholders
of Pioneer American approve the transactions contemplated by
the merger agreement, or Pioneer American or Pioneer American
Bank shall have authorized, recommended or proposed (or
publicly announced its intention to authorize, recommend or
propose) an agreement to engage in an acquisition transaction
with any person other than NBT or NBT Bank;
|X| any person other than NBT or NBT Bank shall have made a bona
fide proposal to Pioneer American or its stockholders to
engage in an acquisition transaction and there was a public
announcement of such proposal;
|X| any person other than NBT or NBT Bank shall have filed with
the Securities and Exchange Commission a registration
statement or tender offer materials with respect to a
potential exchange or tender offer that would constitute an
acquisition transaction;
|X| Pioneer American shall have breached any covenant or
obligation contained in the merger agreement in anticipation
of engaging in an acquisition transaction with any person
other than NBT or NBT Bank, and following such breach, NBT
would be entitled to terminate the merger agreement as
provided by section 11.2(b) of the merger agreement; or
|X| any person other than NBT or NBT Bank shall have filed an
application or notice with the Federal Reserve Board or other
federal or state bank regulatory or antitrust authority, which
application or notice such authority has accepted for
processing, for approval to engage in an acquisition
transaction.
The stock option agreement defines the term acquisition transaction as
any transaction under which a person proposes to or will acquire a majority of
the stock of, merge or consolidate with, or acquire all or substantially all of
the assets of Pioneer American or Pioneer American Bank, or otherwise engage in
any substantially similar transaction with Pioneer American or Pioneer American
Bank.
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The stock option will terminate upon the earliest to occur of:
|X| completion of the merger;
|X| termination of the merger agreement in accordance with its
terms, except a termination by NBT due to a breach by Pioneer
American of a representation, warranty or covenant or a
termination due to a determination in good faith by the
Pioneer American Board, on the advice of counsel, that the
termination is required for the Pioneer American Board to
comply with its fiduciary duties to its stockholders imposed
by law by reason of a proposal by a person other than NBT or
NBT Bank to acquire more than one percent of the Pioneer
American common stock; or
|X| passage of eighteen months after termination of the merger
agreement following the two excepted events cited in the item
above.
Upon the occurrence of a triggering event that occurs prior to the
termination of the stock option, NBT will have registration rights under the
Securities Act with respect to the shares of Pioneer American common stock
issued or issuable under the stock option.
The stock option agreement also provides that at any time after the
occurrence of a repurchase event (as defined below), upon request, Pioneer
American will repurchase the stock option from the holder of the stock option.
The purchase price of the repurchase will equal the amount by which the
market/offer price exceeds the stock option price multiplied by the number of
shares then subject to the stock option. To the extent NBT previously acquired
shares of Pioneer American common stock upon the exercise of part of the stock
option, Pioneer American will repurchase such shares at the market/offer price.
The term market/offer price means the highest of the following:
|X| the highest price per share paid by any person that acquires
beneficial ownership of 50% or more of the Pioneer
American common stock;
|X| the price per share of Pioneer American common stock that any
third party is to pay under an agreement with Pioneer American
in connection with the repurchase event;
|X| the highest closing price per share of Pioneer American common
stock within the six-month period immediately preceding the
date that notice to repurchase is given; or
|X| in the event of a sale of all or a substantial portion of
Pioneer American's or Pioneer American Bank's net assets or
deposits, the sum of the net price paid for such assets or
deposits and the current market value of the remaining net
assets (as determined by a nationally recognized investment
banking firm), divided by the number of shares of Pioneer
American common stock outstanding at the time of such sale.
The stock option agreement defines repurchase event as
|X| the acquisition by any third party of beneficial ownership of
50% or more of the then outstanding shares of Pioneer
American's common stock or
|X| the consummation of an acquisition transaction (as defined
above) by any person other than NBT or NBT Bank.
Under the terms of the stock option agreement, if, prior to the
termination of the stock option, Pioneer American or Pioneer American Bank
enters into an extraordinary transaction, such as a merger, consolidation or
agreement to sell all or substantially all of its assets or deposits, in which
Pioneer American or Pioneer American Bank is effectively not the surviving
corporation, the holder of the stock option may convert or exchange the stock
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option into or for an option with terms similar to those of the stock option
being converted or exchanged to purchase stock of the entity that is the
effective successor to Pioneer American or Pioneer American Bank.
The stock option agreement generally provides that neither NBT nor
Pioneer American may assign any of its respective rights or obligations under
the stock option agreement without the express written consent of the other
party. However, if a triggering event occurs before termination of the stock
option, NBT may, subject to limitations, assign its rights and obligations under
the stock option in whole or in part. However, until fifteen days after the
Federal Reserve Board has approved an application by NBT under the Bank Holding
Company Act of 1956 to acquire the option shares, NBT may not assign its rights
under the NBT option except in one of the following ways:
|X| a widely dispersed public distribution;
|X| a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of
Pioneer American;
|X| an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely
dispersed public distribution on NBT's behalf; or
|X| any other manner approved by the Federal Reserve Board.
To the best knowledge of Pioneer American and NBT, no event giving rise
to any rights to exercise the stock option has occurred as of the date of this
joint proxy statement/prospectus.
ACCOUNTING TREATMENT
We expect the merger to be accounted for as a pooling of interests in
accordance with generally accepted accounting principles ("GAAP"). Under this
method of accounting, NBT stockholders and Pioneer American stockholders will be
deemed to have combined their existing voting stock interests by virtue of the
exchange of shares of Pioneer American common stock for shares of NBT common
stock. Accordingly, the book value of the assets, liabilities and stockholders'
equity of each of NBT and Pioneer American, 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.
It is a condition to consummation of the merger that NBT receive a
letter from its independent auditor that the merger qualifies for pooling of
interests accounting treatment. See "The Issuance of NBT Common Stock in the
Merger and Ratification of the Merger Agreement -- Conditions to Complete the
Merger."
As described in "Rights of Dissenting Stockholders," Pioneer American
stockholders have a right to dissent to the merger and to receive cash in the
exercise of their dissenters' rights. If such cash paid combined with other
pooling of interests violations exceed 10% of the outstanding shares of Pioneer
American common stock, the merger will not qualify for pooling of interests
accounting treatment.
The parties have prepared the unaudited pro forma financial information
contained in this joint proxy statement/prospectus using the pooling of
interests accounting method to account for the merger. See "Summary -- Selected
Historical and Pro Forma Combined Financial Data" and "Summary -- Unaudited
Comparative Per Share Data."
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DISSENTERS' OR APPRAISAL RIGHTS
Holders of NBT common stock are not entitled to dissenters' and
appraisal rights under Delaware law in connection with the merger. Under
Pennsylvania law, Pioneer American stockholders are entitled to dissenters'
rights in connection with the merger. See "Rights of Dissenting Stockholders"
and "Comparison of Stockholders' Rights -- Appraisal/Dissenters' Rights."
INCLUSION OF NBT'S COMMON STOCK ON NASDAQ NATIONAL MARKET
A condition to the merger requires that the Nasdaq shall have
authorized the shares of NBT common stock to be issued in the merger for
inclusion on the Nasdaq National Market. NBT's common stock is listed on the
Nasdaq National Market under the symbol "NBTB." Upon completion of the merger,
we will deregister the Pioneer American common stock under the Securities
Exchange Act. See "Price Range of Common Stock and Dividends."
DIVIDENDS
NBT, as the surviving corporation, expects that after completion of the
merger, subject to approval and declaration by its Board, it will continue its
current dividend policy and declare regularly scheduled quarterly cash dividends
and annual stock dividends on the shares of its common stock consistent with
past practices. The current annualized rate of cash dividends on the shares of
NBT common stock is $0.68 per share.
Pioneer American expects to continue to declare regularly scheduled
dividends on the Pioneer American common stock until the merger closes,
including regular quarterly cash dividends of $0.20 per share, subject to the
terms of the merger agreement. The right of holders of Pioneer American common
stock to receive dividends from Pioneer American will end upon the completion of
the merger when the separate corporate existence of Pioneer American will cease.
See "Price Range of Common Stock and Dividends."
The merger agreement provides that after the date of the merger
agreement NBT and Pioneer American will coordinate with each other the
declaration of any dividends with respect to NBT common stock and Pioneer
American common stock as well as the record dates and payment dates of any
dividends.
EXCHANGE OF PIONEER AMERICAN CERTIFICATES
Promptly after the effective time, NBT will deposit with the exchange
agent, American Stock Transfer and Trust Company, New York, New York,
certificates representing the shares of NBT common stock that are issuable in
connection with the merger for shares of Pioneer American common stock. NBT will
also deposit with the exchange agent an estimated amount of cash payable instead
of fractional shares. Promptly after the effective time, NBT will cause the
exchange agent to send to each holder of record of shares of Pioneer American
common stock at the effective time of the merger transmittal materials for use
in the exchange of the merger consideration for certificates representing
Pioneer American common stock. NBT will deliver to holders of Pioneer American
common stock who surrender their certificates to the exchange agent, together
with properly executed transmittal materials and any other required
documentation, certificates representing the number of shares of NBT common
stock to which such holders are entitled. NBT will not issue any fractional
shares. Instead, NBT will pay each holder of Pioneer American common stock who
would otherwise be entitled to a fractional share of NBT common stock an amount
in cash, without interest, calculated by multiplying such fraction by the
average of the closing bid price and the closing asked price per share for NBT
common stock as reported on the Nasdaq Stock Market for each of the twenty
consecutive trading days ending on and including the eighth trading day before
the effective time of the merger.
Until properly surrendering their certificates, holders of unexchanged
shares of Pioneer American common stock will not be entitled to receive any
dividends or distributions with respect to NBT common stock. After surrender of
the certificates representing Pioneer American common stock, the record holder
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of such shares will be entitled to receive any such dividends or other
distributions, without interest, which had previously become payable with
respect to shares of NBT common stock represented by such certificate.
HOLDERS OF PIONEER AMERICAN COMMON STOCK SHOULD NOT SEND IN
CERTIFICATES REPRESENTING PIONEER AMERICAN COMMON STOCK UNTIL THEY RECEIVE
TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT.
PIONEER AMERICAN STOCK OPTIONS
At the effective time, NBT will assume the former Pioneer American
stock option plans. At the effective time of the merger, all outstanding and
unexercised Pioneer American stock options will no longer represent a right to
acquire shares of Pioneer American common stock but will convert automatically
into options to purchase shares of NBT common stock. NBT will assume such
Pioneer American stock options subject to the terms and conditions of Pioneer
American stock option or similar plans and related option agreements as in
effect immediately prior to the effective time under which Pioneer American
issued the assumed stock options.
After the effective time of the merger, the number of shares of NBT
common stock purchasable upon exercise of any such Pioneer American option will
equal the number of shares of Pioneer American common stock that were
purchasable under such Pioneer American option immediately prior to the
effective time multiplied by the exchange ratio established for the merger,
rounding down to the nearest whole share. The per share exercise price under
each such Pioneer American stock option, rounding down to the nearest whole
cent, will equal the aggregate exercise price under the stock options divided by
the number of shares of NBT common stock issuable under the assumed Pioneer
American stock option plans. The duration and other terms of each new NBT stock
option will be substantially the same as the prior Pioneer American stock
option. The terms of each Pioneer American option will be subject to further
adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction with respect to NBT common stock
on or after the effective time of the merger.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties made by
NBT and/or Pioneer American relating to the following matters:
|X| due organization, corporate power, good standing and
due registration as a bank holding company
|X| capitalization
|X| subsidiaries
|X| corporate power and authority to conduct business, own
property and enter into the merger agreement, the stock
option agreement and related transactions
|X| non-contravention of certain organizational documents, agree-
ments or governmental orders
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|X| reports and other documents filed with the SEC and certain
bank holding company and bank regulatory authorities, and the
accuracy of the information contained in the documents
|X| financial statements
|X| examinations by bank regulatory agencies
|X| undisclosed liabilities
|X| litigation and regulatory action
|X| compliance with laws
|X| contractual defaults
|X| brokers and financial advisers
|X| tax and accounting matters
|X| insurance
|X| labor matters
|X| environmental matters
|X| absence of certain material changes and events
|X| required regulatory approvals
|X| loans and non-performing and classified assets
|X| allowances for loan losses
|X| administration of fiduciary accounts
|X| Year 2000 readiness
|X| deposit insurance
CONDUCT OF BUSINESS PENDING COMPLETION OF THE MERGER
The merger agreement contains various covenants and agreements that
govern Pioneer American's and NBT's actions prior to the effective time of
merger, including the following:
Conduct of Business. Pioneer American has agreed that it and Pioneer
American Bank will conduct their respective businesses diligently and
substantially in the same manner as previously and to use commercially
reasonable efforts to preserve intact their business organizations, and to
maintain their existing relations with customers, employees and business
associates.
Capital Stock. Pioneer American has agreed to restrictions on its
ability to authorize, issue or make any distribution of its capital stock or any
other securities, or grant any options to acquire additional securities, or
declare or distribute any stock dividend or authorize a stock split. Pioneer
American has agreed not to make any direct or indirect redemption, purchase or
other acquisition of its capital stock. Pioneer American has further agreed not
to take any action which would prevent or impede the merger from qualifying for
pooling of interests accounting.
Dividends. Pioneer American has agreed not to declare or pay any
dividend other than (i) customary periodic cash dividends paid by Pioneer
American to holders of its common stock in amounts not exceeding $0.20 per
calendar quarter and at intervals that are not shorter than past practice, and
(ii) customary cash dividends paid by Pioneer American Bank whose amounts have
not exceeded past practice and at intervals that are not shorter than past
practice. In addition, Pioneer American has agreed that it will coordinate with
NBT the declaration of any dividends with respect to Pioneer American common
stock and the record dates and payment dates of such dividends.
Compensation; Employment Agreements; Benefit Plans. Pioneer American
has agreed not to:
|X| increase the rate of compensation of any employee or enter
into any agreement to increase the rate of compensation of any
employee, except for increases in the ordinary course of
business in accordance with past practices, which together
with all other compensation rate increases do not exceed 4.5
percent per annum of the aggregate payroll as of September 30,
1999, and except as explicitly contemplated by the merger
agreement; nor
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|X| create or modify any pension or profit sharing plan, bonus,
deferred compensation, death benefit, or retirement plan, or
the level of benefits under any such plan, nor increase or
decrease any severance or termination pay benefit or any other
fringe benefit, except as required by law; nor
|X| enter into any employment or personal services contract with
any person or firm, except directly to facilitate the
transactions contemplated by the merger agreement.
Dispositions, Acquisitions and Capital Expenditures. Pioneer American
has agreed not to:
|X| either (i) merge into, consolidate with, or sell or otherwise
dispose of its assets to any other corporation or person, or
enter into any other transaction or agree to effect any other
transaction not in the ordinary course of its business or (ii)
engage in any discussions concerning such a possible
transaction unless the Pioneer American Board, based upon the
advice of its counsel, determines in good faith that such
action is required for the Pioneer American Board to comply
with its fiduciary duties to stockholders imposed by law; nor
|X| incur any liability or obligation, make any commitment or
disbursement, acquire or dispose of any property or asset,
make any contract or agreement, pay or become obligated to pay
any legal, accounting, or miscellaneous other expense, or
engage in any transaction, except in the ordinary course of
its business or to accomplish the transactions contemplated by
the merger agreement; nor
|X| subject any of its properties or assets to any lien, claim,
charge, option, or encumbrance, other than in the
ordinary course of business; nor
|X| enter into or assume any commitment to make capital
expenditures, any of which individually exceeds $20,000 or
which in the aggregate exceed $50,000.
Amendments. The merger agreement provides that neither Pioneer American
nor Pioneer American Bank will amend its respective charter or bylaws, nor
convert the charter or form of entity of Pioneer American Bank.
Preservation of Business. Pioneer American has agreed that it and
Pioneer American Bank will:
|X| carry on their business and manage their assets and properties
diligently and substantially in the same manner as
before the execution of the merger agreement;
|X| maintain the ratio of their loans to their deposits at
approximately the same level as existed at September 30, 1999,
as adjusted to allow for seasonal fluctuations of loans and
deposits of a kind and amount experienced traditionally by
them;
|X| manage their investment portfolio in substantially the same
manner and under substantially the same investment policies as
in 1997 and 1998, and take no action to change to any material
extent the percentage which their investment portfolio bears
to their total assets, or to lengthen to any material extent
the average maturity of their investment portfolio, or of any
significant category of their portfolio;
|X| use commercially reasonable efforts to continue in effect
their present insurance coverage on all properties,
assets, business, and personnel;
|X| use commercially reasonable efforts to preserve their business
organization intact, to keep available their present
employees, and to preserve their present relationships with
customers and others having business dealings with them;
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|X| not do anything and not fail to do anything which will cause a
breach of or default in any contract, agreement, commitment,
or obligation to which they are a party or by which they may
be bound; and
|X| conduct their affairs so that at the effective time of the
merger none of their representations and warranties will be
inaccurate, none of their covenants and agreements will be
breached, and no condition in the merger agreement will remain
unfulfilled by reason of their actions or omissions.
Acquisition Proposals. Pioneer American and Pioneer American Bank have
agreed that they will not
|X| solicit any inquiries or proposals to acquire more than one
percent of Pioneer American common stock or any capital stock
of Pioneer American Bank or any significant portion of the
assets of either of them;
|X| afford any third party which may be considering such a
transaction access to its properties, books or records except
as required by mandatory provisions of law;
|X| enter into any discussions or negotiations for, or enter into
any agreement or understanding which provides for such
a transaction; or
|X| authorize or permit any of its directors, officers, employees
or agents to do or permit any of the activities
referred to in this paragraph.
Pioneer American, however, may participate in discussions or
negotiations with, or furnish information to, any person if, after consultation
with and consideration of the advice of outside counsel, its board of directors
has determined in good faith that such action is required for the board of
directors to comply with its fiduciary duty to stockholders imposed by law.
Pioneer American has agreed to keep NBT informed of the status and all material
information regarding any such discussions or negotiations.
Employee Benefit Matters. Employees of Pioneer American and Pioneer
American Bank who become participants in any employee benefit plans of NBT will
receive credit for prior service with Pioneer American or Pioneer American Bank
for purposes of eligibility and vesting as long as such crediting of service
does not result in duplication of benefits. If necessary, NBT has generally
agreed, subject to certain exceptions, to cause the waiver of any pre-existing
condition limitations and eligibility waiting periods under group health plans
with respect to such participants and their eligible dependents.
Termination Benefits and Severance Obligations. NBT has agreed that any
employee of Pioneer American or Pioneer American Bank who becomes an employee of
NBT or any of its subsidiaries immediately following the effective time of the
merger whose employment is terminated subsequent to the effective time will be
entitled to severance pay, if any, in accordance with the general severance
policy of NBT.
Regulatory Applications and Filings. NBT and Pioneer American have
agreed that they will cooperate and use their best efforts to effect all filings
and obtain all necessary government approvals to complete the transactions
contemplated by the merger agreement.
Indemnification. The merger agreement provides that, after the
effective time of the merger, NBT will take no action to abrogate or diminish
any right accorded under the Articles of Incorporation or bylaws of Pioneer
American as they existed immediately prior to the effective time to any person
who, on or prior to the effective time, was a director or officer of Pioneer
American to indemnification from or against losses, expenses, claims, demands,
damages, liabilities, judgments, fines, penalties, costs, expenses, and amounts
paid in settlement pertaining to or incurred in connection with any threatened
or actual action, suit, claim, or proceeding (whether civil, criminal,
administrative, arbitration, or investigative) arising from events, matters,
actions, or omissions occurring on or prior to the effective time of the merger.
To the extent permitted by law, all rights to such indemnification accorded
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under the Articles of Incorporation and bylaws of Pioneer American to any person
who, on or prior to the effective time, was a director or officer of Pioneer
American will survive the effective time and, following the merger, to the
extent permitted by law, NBT will honor such obligations in accordance with
their terms with respect to events, acts, omissions occurring prior to the
effective time.
Post-Closing Governance. NBT has agreed, subject to the fiduciary
duties of its directors to NBT, to cause three members of the Pioneer American
Board to be appointed to the NBT Board, with Mr. Joseph Nasser to serve in the
class whose term expires in 2003, Mr. Gene E. Goldenziel to serve in the class
whose term expires in 2001, and Mr. Richard Chojnowski to serve in the class
whose term expires in 2002. See "The Companies -- NBT Following the Merger."
Certain Other Covenants. The merger agreement contains other covenants
of the parties relating to:
|X| the preparation and distribution of this joint proxy
statement/prospectus;
|X| the respective NBT and Pioneer American stockholders' meetings
and the recommendations of the respective boards of
directors;
|X| cooperation in issuing public announcements;
|X| access to information;
|X| confidentiality;
|X| inclusion of the NBT common stock issuable to the holders of
shares of Pioneer American common stock for trading on
the Nasdaq National Market; and
|X| the delivery of financial statements of Pioneer American to
NBT.
CONDITIONS TO COMPLETE THE MERGER
The obligations of each of NBT and Pioneer American to complete the
merger are subject to the satisfaction or waiver, subject to compliance with
applicable law, of conditions, including:
|X| obtaining the requisite votes of approval from the respective
stockholders of Pioneer American and NBT;
|X| obtaining all governmental approvals required to complete the
merger;
|X| obtaining all other necessary third party consents and
approvals to complete the merger;
|X| the absence of injunctions, decrees, orders, laws, statutes or
regulations enjoining, preventing or making illegal
the completion of the merger;
|X| the declaration of effectiveness of the registration statement
on Form S-4 by the SEC and the absence of any stop
order or proceedings seeking a stop order;
|X| the delivery of an opinion to NBT and Pioneer American to the
effect that the merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code;
|X| the approval for inclusion on the Nasdaq National Market of
the NBT common stock issuable to Pioneer American's
stockholders in the merger; and
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|X| the receipt by NBT of an opinion from its independent auditor
stating that the merger qualifies for "pooling of interests"
accounting treatment.
The obligations of each of NBT and Pioneer American to complete the
merger are further subject to satisfaction or waiver of the following
conditions:
|X| the representations and warranties of the other party in the
merger agreement are to be materially true and correct as of
the effective time of the merger, except for representations
and warranties made as of a specified date which will be true
and correct as of such specified date;
|X| all of the agreements and covenants of the other party to be
performed and complied with on or prior to the effective time
of the merger are to have been performed and complied with in
all material respects; and
|X| each of NBT and Pioneer American is to have received a
certificate dated the effective time of the merger signed by
designated executive officers of the other party to the effect
that the above two conditions have been satisfied.
TERMINATION AND TERMINATION FEES
General Termination Rights. The parties may terminate the merger
agreement at any time prior to the effective time, whether before or after
approval by the Pioneer American stockholders or NBT stockholders:
|X| by mutual written consent of the parties;
|X| by either NBT or Pioneer American if any of the following
occurs:
(1) the merger has not been completed by July 31, 2000,
except to the extent that the failure to complete the
merger results from the failure of the party seeking
termination to perform or observe the agreements and
covenants of such party in the merger agreement;
(2) the Pioneer American stockholders fail to approve the
merger agreement at the Pioneer American special
meeting;
(3) the NBT stockholders fail to approve the merger
agreement at the NBT annual meeting;
(4) the NBT stockholders shall have voted on and failed
to approve a proposed amendment to NBT's Certificate
of Incorporation increasing the number of authorized
shares of NBT common stock from fifteen million to
thirty million; or
(5) any governmental entity has issued a final,
non-appealable order denying an approval or consent
that is required to complete the merger.
|X| by Pioneer American if any of the following occur:
(1) the material incorrectness when made of any of NBT's
representations and warranties;
(2) a material breach or a material failure by NBT of its
covenants under the merger agreement, and NBT has not
cured the breach or failure; or
(3) if the Pioneer American Board, based upon the advice
of its counsel, determines in good faith that
termination is required in order for the Board to
comply with its fiduciary duties to stockholders
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imposed by law by reason of having received from a
third party a proposal to acquire more than one
percent of the Pioneer American common stock or any
capital stock of Pioneer American Bank or any
significant portion of the assets of Pioneer American
or Pioneer American Bank.
|X| by NBT if either of the following occurs:
(1) the material incorrectness when made of any of
Pioneer American's representations and warranties; or
(2) a material breach or a material failure by Pioneer
American of its covenants under the merger agreement,
and Pioneer American has not cured the breach or
failure.
Termination Upon a Decline in the Value of NBT Common Stock. Pioneer
American has the right to cancel the merger if:
|X| the price of a share of NBT common stock declines below $15.00 and
|X| the NBT stock price decline, expressed as a percentage, is more
than 15 percentage points greater than the weighted average stock
price decline of the index group.
The price per NBT share of $15.00 represents a 10.45% decline in the price per
NBT share of $16.75 which is the share price used by NBT and Pioneer American in
their negotiation of the merger agreement. Even if both of these two conditions
are present and Pioneer American decides to cancel the merger, NBT can require
Pioneer American to complete the merger by increasing the number of shares of
NBT common stock to be issued to Pioneer American's stockholders, so that a
Pioneer American stockholder will receive at least $27.08 worth of NBT stock for
each share of Pioneer American common stock.
In order to determine the price and percentage decline in the value of
the NBT common stock and of the weighted average stock price of the index group,
we will take the average of the closing bid and asked prices per share for NBT
common stock and for the companies in the index group for each of the 20
consecutive trading days ending on the eighth trading day before the day chosen
to be the effective date of the merger.
The following two examples illustrate how this termination provision in
the merger agreement would work:
Example One: Assume that the average price per NBT share during the
20-day trading period is $14.00, which is a decline of $2.75 from $16.75, or,
expressed as a percentage, of 16.42%; and assume that the decline in the
weighted average price per share of the index group during the 20-day trading
period, expressed as a percentage, is 4.25%. We subtract 4.25% from 16.42% to
arrive at 12.17%. Under this example only the first of the two conditions is
present and Pioneer American would not have the right to cancel the merger
agreement.
Example Two: Assume that the average price per NBT share during the
20-day trading period is again $14.00; however, assume that the decline in the
weighted average price per share of the index group, expressed as a percentage,
is 1.00%. We subtract 1.00% from 16.42% and arrive at 15.42%. The first and
second conditions of the termination provision are present and Pioneer American
has the right to cancel the merger agreement. NBT can require Pioneer American
to complete the merger by increasing the number of shares it will issue to
Pioneer American stockholders. Under Example Two, NBT would have to increase the
exchange ratio from 1.805 to 1.934 in order to require Pioneer American to
complete the merger. We compute the new exchange ratio of 1.934 by taking the
exchange ratio of 1.805 and adjusting it to offset the decline from $15.00 in
the average price per NBT share during the 20-day trading period (1.805 x $15.00
/ $14.00 = 1.934).
In the event Pioneer American terminates the merger agreement, under
the provisions referenced above relating to a decline in the price of NBT common
stock, stockholder action would not be required. Neither the NBT Board nor the
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Pioneer American Board has made a decision as to whether it would exercise its
rights under the merger agreement under such circumstances. The respective
boards of NBT and Pioneer American would make such a decision in light of the
circumstances existing at the time that the respective board has the opportunity
to make such an election, if any. Prior to making any determination to exercise
their respective rights under the merger agreement, the Boards would consult
their respective financial and other advisors and would consider all financial
and other information deemed relevant to their respective decisions. There can
be no assurance that the Boards would exercise their respective rights under the
merger agreement if the conditions set forth above were applicable. If the
Pioneer American Board does not elect to exercise its right to terminate the
merger agreement under the circumstances discussed in this section, the exchange
ratio would be 1.805 and the dollar value of the consideration which the
stockholders of Pioneer American would receive for each share of Pioneer
American common stock would be the value 1.805 shares of NBT common stock at the
effective time of the merger.
Termination and Damages for Breach of the Merger Agreement. If
termination of the merger agreement is the result of material incorrectness of
any representation or warranty or the material breach or material failure of a
covenant, the party whose representations or warranties were materially
incorrect or which materially breached the covenant will be liable to the other
party in the amount of $500,000. If termination of the merger agreement is the
result of a determination by the Pioneer American Board that its fiduciary duty
to Pioneer American's stockholders requires termination of the merger agreement
because of a proposal to acquire stock or assets of Pioneer American or Pioneer
American Bank, or if termination of the merger agreement is the result of
material incorrectness of any representation or warranty of Pioneer American or
the material breach or material failure of a Pioneer American covenant, and
Pioneer American or Pioneer American Bank signs a definitive agreement with
respect to a proposal to acquire stock or assets of Pioneer American or Pioneer
American Bank within one year after termination of the merger agreement, then
Pioneer American will be liable to NBT for liquidated damages in the further
amount of $3 million.
AMENDMENT AND WAIVER
Subject to compliance with applicable law, the party to the merger
agreement benefited by a particular provision may, prior to the effective time
of the merger, waive that provision of the merger agreement. The parties to the
merger agreement may amend or modify any provision at any time by an agreement
in writing between the parties.
SURVIVAL OF CERTAIN PROVISIONS
If the Merger Agreement Becomes Effective. After the effective time of
the merger, various provisions of the merger agreement regarding the following
matters will survive and remain effective:
|X| procedures for the issuance of NBT common stock and NBT stock
options in exchange for Pioneer American common stock and
outstanding Pioneer American stock options;
|X| indemnification of Pioneer American directors and officers;
|X| employment of Mr. Reuther; and
|X| appointment or election of three Pioneer American directors as
directors of NBT.
If the Merger Agreement Terminates before the Effective Time. If
the merger agreement terminates before the effective time, various provisions of
the merger agreement regarding the following matters will survive and remain
effective:
|X| confidentiality of information obtained in connection with the
merger agreement;
|X| provisions regarding information provided for applications and
the registration statement;
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|X| liability of the companies to each other as a result of the
termination of the merger agreement; and
|X| expenses incurred in connection with the proposed merger.
RESTRICTIONS ON RESALES BY AFFILIATES
NBT has registered the shares of common stock issuable to the Pioneer
American 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 Pioneer American may trade their
shares freely without restriction.
Any subsequent transfer of shares by any person who is an affiliate of
Pioneer American at the time of submission of the merger agreement to the
Pioneer American stockholders for their vote will, under existing law, require
either:
|X| the further registration under the Securities Act of the
shares of NBT common stock to be transferred;
|X| compliance with Rule 145 promulgated under the Securities Act,
which permits limited sales under certain
circumstances; or
|X| the availability of another exemption from registration of the
shares.
An affiliate of Pioneer American is a person who directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with Pioneer American. We expect these restrictions to
apply to the directors and executive officers of Pioneer American and the
holders of 10% or more of the Pioneer American common stock. The same
restrictions apply to certain relatives or the spouse of those persons and any
trusts, estates, corporations or other entities in which those persons have a
10% or greater beneficial or equity interest. NBT will give stop transfer
instructions to the transfer agent with respect to those shares of NBT common
stock held by persons subject to these restrictions, and NBT will place a legend
on the certificates for their shares accordingly.
SEC guidelines regarding qualifying for the "pooling of interests"
method of accounting limit sales of shares of NBT and Pioneer American 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 Pioneer American if
such affiliates do not dispose of any of the shares of the corporation they own,
or shares of a corporation they receive in connection with a merger, during the
period beginning thirty days before completion of the merger and ending when NBT
has published financial results covering at least thirty days of post-merger
operations of NBT.
Pioneer American has agreed in the merger agreement to use commercially
reasonable efforts to cause each person who is an affiliate of Pioneer American
for purposes of Rule 145 under the Securities Act and for purposes of qualifying
the merger for pooling of interests accounting treatment to deliver to NBT a
written agreement intended to ensure compliance with the Securities Act and to
preserve NBT's ability to treat the merger as a pooling of interests.
FEES FOR FINANCIAL ADVISORY SERVICES
NBT and Pioneer American have each retained the services of financial
advisors in connection with evaluation of the merger and the terms associated
with the merger consideration. See "The Issuance of NBT Common Stock in the
Merger and Ratification of the Merger Agreement -- Opinion of NBT's Financial
Advisor" and "-- Opinion of Pioneer American's Financial Advisor."
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ALLOCATION OF COSTS AND EXPENSES
The merger agreement provides that each party to the merger agreement
will be responsible for paying its own costs and expenses, including the fees
and expenses of its own counsel, financial advisors, accountants and tax
advisors, incurred in connection with the merger agreement. However, the merger
agreement expressly allocates certain specified expenses as follows:
|X| each party will pay its proportionate share of the cost of
printing the joint proxy statement/prospectus based upon the
number of copies each shall request for printing;
|X| NBT will pay the cost of delivering the joint proxy
statement/prospectus and other material to the NBT
stockholders;
|X| Pioneer American will pay the cost of delivering the joint
proxy statement/prospectus and other material to the
Pioneer American stockholders;
|X| NBT will pay the cost of registering under the federal and
state securities laws the shares of NBT common stock that NBT
will issue to the Pioneer American stockholders upon
completion of the merger; and
|X| Pioneer American will pay the cost of procuring the required
tax opinion.
THE COMPANIES
NBT BANCORP INC.
NBT Bancorp Inc. is a registered bank holding company headquartered in
Norwich, New York. NBT is the parent holding company of NBT Bank, N.A. and LA
Bank, National Association, each a national bank. The principal asset of NBT is
all of the outstanding shares of common stock of NBT Bank and LA Bank, and its
principal source of revenue is dividends it receives from NBT Bank and LA Bank.
NBT Bank is a full service commercial bank providing a broad range of
financial products and services. NBT Bank has thirty-six locations serving a
nine county area in central and northern New York. As of December 31, 1999, NBT
Bank had 445 full-time and 76 part-time employees. NBT Bank is not a party to
any collective bargaining agreements, and employee relations are considered to
be good.
On February 17, 2000, NBT completed its acquisition of Lake Ariel.
Following that merger, LA Bank, formerly a wholly-owned subsidiary of Lake
Ariel, became a wholly-owned subsidiary of NBT. At the present time LA Bank
continues to operate under the LA Bank name. LA Bank was founded in 1910 and is
a national banking association and member of the Federal Reserve System. LA Bank
is a full-service commercial bank providing a range of services and products,
including time and demand deposit accounts, consumer, commercial and mortgage
loans, and credit cards to individuals and small to medium-sized businesses in
its northeastern Pennsylvania market area. LA Bank has 22 locations located in
Lackawanna, Luzerne, Monroe, Pike and Wayne Counties, Pennsylvania. LA Bank has
two subsidiaries, LA Lease, Inc., a business unit that engages in consumer and
commercial leasing; and Ariel Financial Services, Inc., a business unit that
offers stocks, bonds, annuities and other insurance-related products. As of
December 31, 1999, LA Bank had 146 full-time and 36 part-time employees. LA Bank
is not a party to any collective bargaining agreements, and employee relations
are considered to be good.
The banking business is extremely competitive, and NBT Bank encounters
intense competition from other financial institutions located within its market
area. The banking business in LA Bank's 5-county market is considered to be
extremely competitive. In addition, NBT Bank and LA Bank compete not only with
other commercial banks but also with other financial institutions such as
thrifts, credit unions, money market and mutual funds, insurance companies,
brokerage firms, and a variety of other companies offering financial services.
Some of these financial services providers are located outside their respective
market areas.
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NBT's principal executive offices are located at 52 South Broad Street,
Norwich, New York 13815, and its telephone number is (607) 337-2265.
PIONEER AMERICAN HOLDING COMPANY CORP.
Pioneer American is a registered bank holding company and Pennsylvania
business corporation and is headquartered in Carbondale, Pennsylvania. Pioneer
American has one wholly-owned subsidiary which is Pioneer American Bank.
Pioneer American Bank was founded in 1864 and is a national banking
association and member of the Federal Reserve System. Pioneer American Bank is a
full-service commercial bank providing a range of services and products,
including time and demand deposit accounts, consumer, commercial and mortgage
loans to individuals and small to medium-sized businesses in its northeastern
Pennsylvania market area. Pioneer American Bank has 18 locations located in
Lackawanna, Luzerne, Monroe, Wayne and Wyoming Counties, Pennsylvania.
As of December 31, 1999, Pioneer American Bank had 159 full-time and 38
part-time employees. Pioneer American Bank is not a party to any collective
bargaining agreements, and employee relations are considered to be good.
The banking business in Pioneer American Bank's five-county market is
considered to be extremely competitive. Pioneer American Bank competes with
respect to its lending activities, as well as in attracting demand deposits,
with local commercial banks, other commercial banks with branches in Pioneer
American Bank's market area, savings banks, savings and loan associations,
insurance companies, finance companies, leasing companies, mutual funds, credit
unions and others. Pioneer American Bank is generally competitive with financial
institutions in its service area with respect to interest rates paid on time and
savings deposits, service charges on deposit accounts, and interest rates
charged on loans.
Pioneer American's principal executive offices are located at 41 North
Main Street, Carbondale, Pennsylvania. Its telephone number is (570) 282-2662.
NBT FOLLOWING THE MERGER
NBT has agreed in the merger agreement and the merger that NBT, as the
surviving corporation, will, subject to the fiduciary duties of its directors to
NBT, elect or appoint three members of the Pioneer American Board to the NBT
Board. NBT's bylaws provide for a classified board of directors. The board is
divided into three equal classes. Each class holds office for a staggered term
of three years, but only one class comes up for election each year. The merger
agreement provides that NBT will, subject to the fiduciary duties of its
directors to NBT, cause Messrs. Nasser, Goldenziel, and Chojnowski, currently
directors of Pioneer American, to be elected or appointed as directors of NBT
following the merger, with Mr. Nasser to serve as a director of the class whose
term expires in 2003, Mr. Goldenziel to serve as a director of the class whose
term expires in 2001, and Mr. Chojnowski to serve as a director of the class
whose term expires in 2002. After completion of the merger, NBT expects that its
board of directors will consist of the three Pioneer American directors
appointed to newly-created directorships and the twelve current members of the
NBT Board, three of whom will have been former directors of Lake Ariel.
REGULATION AND SUPERVISION
The following discussion sets forth the material elements of the
regulatory framework applicable to bank holding companies and national banks and
provides certain specific information relevant to NBT and Pioneer American. This
regulatory framework primarily is intended for the protection of depositors and
the deposit insurance funds that insure bank deposits, and not for the
protection of security holders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to those provisions. A change in the statutes, regulations, or
regulatory policies applicable to NBT and Pioneer American or to NBT Bank, LA
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Bank and Pioneer American Bank may have a material effect on the business of NBT
or Pioneer American.
Various governmental requirements, including Sections 23A and 23B of
the Federal Reserve Act, limit borrowings by NBT from NBT Bank or LA Bank and by
Pioneer American from Pioneer American Bank and also limit various other
transactions between NBT and NBT Bank or LA Bank and between Pioneer American
and Pioneer American Bank. For example, Section 23A of the Federal Reserve Act
limits to no more than 10 percent of its total capital the aggregate outstanding
amount of any insured bank's loans and other "covered transactions" with any
particular non-bank affiliate and limits to no more than 20 percent of its total
capital the aggregate outstanding amount of any insured bank's covered
transactions with all of its non-bank affiliates. At December 31, 1999,
approximately $13,243,000 were available for loans to NBT from NBT Bank and
approximately $2,001,000 was available for loans to Pioneer American from
Pioneer American Bank. Section 23A of the Federal Reserve Act also generally
requires that an insured bank's loans to its non-bank affiliates be secured, and
Section 23B of the Federal Reserve Act generally requires that an insured bank's
transactions with its non-bank affiliates be on arm's-length terms. Also, NBT
and Pioneer American and their subsidiaries are prohibited from engaging in
certain "tie-in" arrangements in connection with extensions of credit or
provision of property or services.
As national banks, NBT Bank, LA Bank and Pioneer American Bank are
subject to primary supervision, regulation, and examination by the OCC and
secondary regulation by the FDIC and the Federal Reserve Board. NBT Bank, LA
Bank and Pioneer American Bank are subject to extensive federal statutes and
regulations that significantly affect their business and activities. NBT Bank,
LA Bank and Pioneer American Bank must file reports with their regulators
concerning their activities and financial condition and obtain regulatory
approval to enter into certain transactions. NBT Bank, LA Bank and Pioneer
American Bank are also subject to periodic examinations by the OCC to ascertain
compliance with various regulatory requirements. Other applicable statutes and
regulations relate to insurance of deposits, allowable investments, loans,
acceptance of deposits, trust activities, mergers, consolidations, payment of
dividends, capital requirements, reserves against deposits, establishment of
branches and certain other facilities, limitations on loans to one borrower and
loans to affiliated persons, and other aspects of the business of banks. Recent
federal legislation has instructed federal agencies to adopt standards or
guidelines governing banks' internal controls, information systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation and benefits, asset quality, earnings and stock valuation, and
other matters. Legislation adopted in 1994 gives the federal banking agencies
greater flexibility in implementing standards on asset quality, earnings, and
stock valuation. Regulatory authorities have broad flexibility to initiate
proceedings designed to prohibit banks from engaging in unsafe and unsound
banking practices.
NBT, Pioneer American, and their respective subsidiaries are also
affected by various other governmental requirements and regulations, general
economic conditions, and the fiscal and monetary policies of the federal
government and the Federal Reserve Board. The monetary policies of the Federal
Reserve Board influence to a significant extent the overall growth of loans,
investments, deposits, interest rates charged on loans, and interest rates paid
on deposit. The nature and impact of future changes in monetary policies are
often not predictable.
SUPPORT OF SUBSIDIARY BANKS
Under current Federal Reserve Board policy, a bank holding company is
expected to act as a source of financial and managerial strength to each of its
subsidiary banks by standing ready to use available resources to provide
adequate capital funds to its subsidiary banks during periods of financial
adversity and by maintaining the financial flexibility and capital-raising
capacity to obtain additional resources for assisting its subsidiary banks. The
support expected by the Federal Reserve Board may be required at times when the
bank holding company may not have the resources or inclination to provide it.
Section 55 of the National Bank Act permits the OCC to order the
pro-rata assessment of stockholders of a national bank whose capital has become
impaired. NBT and Pioneer American are the sole stockholders of NBT Bank, LA
Bank and Pioneer American Bank. If a stockholder fails, within three months, to
pay that assessment, the OCC can order the sale of the stockholder's stock to
cover the deficiency. In the event of a bank holding company's bankruptcy, any
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commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank would be assumed by the bankruptcy
trustee and entitled to priority of payment.
If a default occurred with respect to a bank, any capital loans to the
bank from its parent holding company would be subordinate in right of payment to
payment of the bank's depositors and certain of its other obligations.
LIABILITY OF COMMONLY CONTROLLED BANKS
Any depository institution insured by the FDIC can be held liable for
any loss incurred, or reasonably expected to be incurred, by the FDIC in
connection with:
|X| the default of a commonly controlled FDIC-insured depository
institution or
|X| any assistance provided by the FDIC to a commonly controlled
FDIC-insured depository institution in danger of
default.
"Default" generally is defined as the appointment of a conservator or
receiver, and "in danger of default" generally is defined as the existence of
certain conditions indicating that a default is likely to occur in the absence
of regulatory assistance.
DEPOSITOR PREFERENCE STATUTE
In the "liquidation or other resolution" of an institution by any
receiver, federal legislation provides that deposits and certain claims for
administrative expenses and employee compensation against an insured bank are
afforded a priority over other general unsecured claims against that bank,
including federal funds and letters of credit.
CAPITAL REQUIREMENTS
NBT and Pioneer American are subject to risk-based capital requirements
and guidelines imposed by the Federal Reserve Board, which are substantially
similar to the capital requirements and guidelines imposed by the OCC on
national banks. For this purpose, a bank's or bank holding company's assets and
certain specified off-balance sheet commitments are assigned to four risk
categories, each weighted differently based on the level of credit risk that is
ascribed to those assets or commitments. In addition, risk-weighted assets are
adjusted for low-level recourse and market-risk equivalent assets. A bank's or
bank holding company's capital, in turn, includes the following tiers:
|X| core ("Tier 1") capital, which includes common equity,
non-cumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests
in equity accounts of consolidated subsidiaries, less
goodwill, certain identifiable intangible assets, and certain
other assets; and
|X| supplementary ("Tier 2") capital, which includes, among other
items, perpetual preferred stock not meeting the Tier 1
definition, mandatory convertible securities, subordinated
debt and allowances for loan and lease losses, subject to
certain limitations, less certain required deductions.
NBT and Pioneer American, like other bank holding companies, are
required to maintain Tier 1 and "Total Capital" (the sum of Tier 1 and Tier 2
capital, less certain deductions) equal to at least 4 percent and 8 percent of
their total risk-weighted assets (including certain off-balance-sheet items,
such as unused lending commitments and standby letters of credit), respectively.
At December 31, 1999, NBT and Pioneer American each met both requirements, with
Tier 1 and total capital equal to 14.30 percent and 15.55 percent (in the case
of NBT) and 14.56 percent and 15.81 percent (in the case of Pioneer American) of
total risk-weighted assets. On an NBT-and-Pioneer American basis, these ratios
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at December 31, 1999 would have been 14.35 percent for Tier 1 capital and 15.61
percent for total capital.
The Federal Reserve Board and the OCC have adopted rules to incorporate
market and interest rate risk components into their risk-based capital
standards. Amendments to the risk-based capital requirements, incorporating
market risk, became effective January 1, 1998. Under the new market-risk
requirements, capital will be allocated to support the amount of market risk
related to a financial institution's ongoing trading activities.
The Federal Reserve Board also requires bank holding companies to
maintain a minimum "Leverage Ratio" (Tier 1 capital to adjusted total assets) of
3 percent if the bank holding company has the highest regulatory rating and
meets certain other requirements, or of 3 percent plus an additional cushion of
at least 1 to 2 percentage points if the bank holding company does not meet
these requirements. At December 31, 1999, NBT's leverage ratio was 9.50 percent
and Pioneer American's leverage ratio was 8.11 percent. On an NBT-and-Pioneer
American basis, the leverage ratio at December 31, 1999 would have been 9.17
percent.
The Federal Reserve Board may set capital requirements higher than the
minimums noted above for holding companies whose circumstances warrant it. For
example, bank holding companies experiencing or anticipating significant growth
may be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"Tangible Tier 1 Leverage Ratio" (deducting all intangibles) and other indicia
of capital strength in evaluating proposals for expansion or new activities or
when a bank holding company faces unusual or abnormal risks. The Federal Reserve
Board has not advised NBT or Pioneer American of any specific minimum leverage
ratio applicable to it.
NBT Bank, LA Bank and Pioneer American Bank are subject to similar
risk-based capital and leverage requirements adopted by the OCC. NBT Bank, LA
Bank and Pioneer American Bank were in compliance with the applicable minimum
capital requirements as of December 31, 1999. The OCC has not advised NBT Bank,
LA Bank or Pioneer American Bank of any specific minimum leverage ratio
applicable to it.
Failure to meet capital requirements could subject a bank to a variety
of enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. The Federal Deposit Insurance
Corporation Improvements Act of 1991 ("FDICIA"), among other things, identifies
five capital categories for insured banks -- well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and critically
undercapitalized -- and requires federal bank regulatory agencies to implement
systems for "prompt corrective action" for insured banks that do not meet
minimum capital requirements based on these categories. The FDICIA imposes
progressively more restrictive constraints on operations, management, and
capital distributions, depending on the category in which an institution is
classified. Unless a bank is well capitalized, it is subject to restrictions on
its ability to offer brokered deposits, on "pass-through" insurance coverage for
certain of its accounts, and on certain other aspects of its operations. FDICIA
generally prohibits a bank from paying any dividend or making any capital
distribution or paying any management fee to its holding company if the bank
would thereafter be undercapitalized. An undercapitalized bank is subject to
regulatory monitoring and may be required to divest itself of or liquidate
subsidiaries. Holding companies of such institutions may be required to divest
themselves of such institutions or divest themselves of or liquidate other
affiliates. An undercapitalized bank must develop a capital restoration plan,
and its parent bank holding company must guarantee the bank's compliance with
the plan up to the lesser of 5 percent of the bank's assets at the time it
became undercapitalized or the amount needed to comply with the plan. Critically
undercapitalized institutions are prohibited from making payments of principal
and interest on subordinated debt and are generally subject to the mandatory
appointment of a conservator or receiver.
Rules adopted by the OCC under FDICIA provide that a national bank is
deemed to be well capitalized if the bank has a total risk-based capital ratio
of 10 percent or greater, a Tier 1 risk-based capital ratio of 6 percent or
greater, and a leverage ratio of 5 percent or greater and the institution is not
subject to a written agreement, order, capital directive, or prompt corrective
action directive to meet and maintain a specific level of any capital measure.
As of December 31, 1999, NBT Bank, LA Bank and Pioneer American Bank were
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well-capitalized, based on the prompt corrective action ratios and guidelines
described above. It should be noted, however, that a national bank's capital
category is determined solely for the purpose of applying the OCC's prompt
corrective action regulations, and that the capital category may not constitute
an accurate representation of the bank's overall financial condition or
prospects.
BROKERED DEPOSITS
Under FDIC regulations, no FDIC-insured bank can accept brokered
deposits unless it
|X| is well capitalized, or
|X| is adequately capitalized and receives a waiver from the FDIC.
In addition, these regulations prohibit any bank that is not well capitalized
from paying an interest rate on brokered deposits in excess of three-quarters of
one percentage point over certain prevailing market rates.
DIVIDEND RESTRICTIONS
NBT is a legal entity separate and distinct from NBT Bank. Similarly,
Pioneer American is a legal entity separate and distinct from Pioneer American
Bank. In general, under the law of their state of incorporation, NBT and Pioneer
American cannot pay a cash dividend if such payment would render them insolvent.
The revenues of NBT and Pioneer American consist primarily of dividends paid by
NBT Bank and Pioneer American Bank respectively. Various federal and state
statutory provisions limit the amount of dividends NBT Bank and Pioneer American
Bank can pay to NBT and Pioneer American without regulatory approval. Dividend
payments by national banks are limited to the lesser of:
|X| the level of undivided profits, and
|X| absent regulatory approval, an amount not in excess of net
income for the current year combined with retained net income
for the preceding two years.
At December 31, 1999, approximately $21.9 million and $4.2 million of
the total stockholders' equity of NBT Bank and Pioneer American Bank were
available for payment of dividends to NBT and Pioneer American, respectively,
without approval by the OCC.
In addition, federal bank regulatory authorities have authority to
prohibit NBT Bank and Pioneer American Bank from engaging in an unsafe or
unsound practice in conducting their business. Depending upon the financial
condition of the bank in question, the payment of dividends could be deemed to
constitute an unsafe or unsound practice. The ability of NBT Bank and Pioneer
American Bank to pay dividends in the future is currently influenced, and could
be further influenced, by bank regulatory policies and capital guidelines.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of NBT Bank, LA Bank and Pioneer American Bank are insured
up to regulatory limits by the FDIC and, accordingly, are subject to deposit
insurance assessments to maintain the Bank Insurance Fund (the "BIF")
administered by the FDIC. The FDIC has adopted regulations establishing a
permanent risk-related deposit insurance assessment system. Under this system,
the FDIC places each insured bank in one of nine risk categories based on the
bank's capitalization and supervisory evaluations provided to the FDIC by the
institution's primary federal regulator. Each insured bank's insurance
assessment rate is then determined by the risk category in which it is
classified by the FDIC.
In the light of the recent favorable financial situation of the federal
deposit insurance funds and the recent low number of depository institution
failures, effective January 1, 1997 the annual insurance premiums on bank
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deposits insured by the BIF vary between $0.00 per $100 of deposits for banks
classified in the highest capital and supervisory evaluation categories to $0.27
per $100 of deposits for banks classified in the lowest capital and supervisory
evaluation categories. BIF assessment rates are subject to semi-annual
adjustment by the FDIC within a range of up to five basis points without public
comment. The FDIC also possesses authority to impose special assessments from
time to time.
The Deposit Insurance Funds Act provides for assessments to be imposed
on insured depository institutions with respect to deposits insured by the BIF
(in addition to assessments currently imposed on depository institutions with
respect to BIF-insured deposits) to pay for the cost of Financing Corporation
("FICO") funding. The FDIC established the FICO assessment rates effective for
the fourth quarter 1999 at approximately $0.012 per $100 annually for
BIF-assessable deposits. The FICO assessments are adjusted quarterly to reflect
changes in the assessment bases of the FDIC insurance funds and do not vary
depending upon a depository institution's capitalization or supervisory
evaluations. In 1999, NBT Bank and Pioneer American Bank paid FICO assessments
of $134,166 and $35,328, respectively.
INTERSTATE BANKING AND BRANCHING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
("Riegle-Neal"), subject to certain concentration limits and other requirements:
|X| bank holding companies such as NBT and Pioneer American are
permitted to acquire banks and bank holding companies
located in any state;
|X| any bank that is a subsidiary of a bank holding company is
permitted to receive deposits, renew time deposits, close
loans, service loans, and receive loan payments as an agent
for any other depository institution subsidiary of that bank
holding company; and
|X| banks are permitted to acquire branch offices outside their
home states by merging with out-of-state banks, purchasing
branches in other states, and establishing de novo branch
offices in other states.
The ability of banks to acquire branch offices through purchase or opening of
other branches is contingent, however, on the host state having adopted
legislation "opting in" to those provisions of Riegle-Neal. In addition, the
ability of a bank to merge with a bank located in another state is contingent on
the host state not having adopted legislation "opting out" of that provision of
Riegle-Neal.
CONTROL ACQUISITIONS
The Change in Bank Control Act prohibits a person or group of persons
from acquiring "control" of a bank holding company, unless the Federal Reserve
Board has been notified and has not objected to the transaction. Under a
rebuttable presumption established by the Federal Reserve Board, the acquisition
of 10 percent or more of a class of voting stock of a bank holding company with
a class of securities registered under Section 12 of the Exchange Act, such as
NBT or Pioneer American, would, under the circumstances set forth in the
presumption, constitute acquisition of control of the bank holding company.
In addition, a company is required to obtain the approval of the
Federal Reserve Board under the BHC Act before acquiring 25 percent (5 percent
in the case of an acquiror that is a bank holding company) or more of any class
of outstanding common stock of a bank holding company, such as NBT or Pioneer
American, or otherwise obtaining control or a "controlling influence" over that
bank holding company.
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FINANCIAL MODERNIZATION
On November 12, 1999, the President signed into law the
Gramm-Leach-Bliley Act (the "Act") which will, effective March 11, 2000, permit
qualifying bank holding companies to become financial holding companies and
thereby affiliate with securities firms and insurance companies and engage in
other activities that are financial in nature or complementary thereto, as
determined by the Federal Reserve Board. A bank holding company may elect to
become a financial holding company if each of its subsidiary banks (a) is well
capitalized under the prompt corrective action provisions of FDICIA, (b) is well
managed, and (c) has at least a satisfactory rating under the Community
Reinvestment Act. The Act identifies several activities as "financial in
nature," including, among others, insurance underwriting and agency, investment
advisory services, and underwriting, dealing in or making a market in
securities. Under the Act, subject to limitations on investment, a national bank
may, through a financial subsidiary of the bank, engage in activities that are
financial in nature, or incidental thereto, excluding, among others, insurance
underwriting, insurance company portfolio investment, real estate development
and real estate investment if the bank is well capitalized, well managed and has
at least a satisfactory CRA rating. Subsidiary banks of a financial holding
company or national banks with financial subsidiaries must continue to be well
capitalized and well managed in order to continue to engage in activities that
are financial in nature without regulatory actions or restrictions, which could
include divestiture of a non-banking subsidiary or subsidiaries. A bank holding
company which does not elect to become a financial holding company may continue
to engage in activities approved for bank holding companies by the Federal
Reserve Board prior to enactment of the Act.
The Act does not significantly alter the regulatory regimes under which
NBT, Pioneer American, NBT Bank, LA Bank or Pioneer American Bank currently
operate, as we describe above. While certain business combinations not currently
permissible will be possible after March 11, 2000, we cannot predict at this
time resulting changes in the competitive environment or the financial condition
of NBT, Pioneer American, NBT Bank, LA Bank or Pioneer American Bank. Using the
financial holding company structure, insurance companies and securities firms
may acquire bank holding companies, such as NBT, Pioneer American or the
combined company, and may compete more directly with banks or bank holding
companies. Neither NBT nor Pioneer American have, at this time, made any
decisions with respect to whether they or the combined company will elect to
become a financial holding company under the Act.
FUTURE LEGISLATION
Various legislation, including proposals to substantially change the
financial institution regulatory system and to expand or contract the powers of
banking institutions and bank holding companies, is from time to time introduced
in the Congress. This legislation may change banking statutes and the operating
environment of the combined company and its subsidiaries in substantial and
unpredictable ways. If enacted, such legislation could increase or decrease the
cost of doing business, limit or expand permissible activities or affect the
competitive balance among banks, savings associations, credit unions, and other
financial institutions. Neither NBT nor Pioneer American can accurately predict
whether any of this potential legislation will ultimately be enacted, and, if
enacted, the ultimate effect that it, or implementing regulations, would have
upon the financial condition or results of operations of the combined company or
any of its subsidiaries.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
We requested Blank Rome Comisky & McCauley LLP, counsel to Pioneer
American, to deliver an opinion as to the anticipated material federal income
tax consequences of the merger. In rendering its opinion, Blank Rome Comisky &
McCauley LLP assumed, among other things, that the merger and related
transactions will take place as described in the merger agreement. Consumation
of the merger is conditioned upon the receipt of an opinion that the merger will
qualify as a reorganization under Section 368(a)(1)(A) of the Internal Revenue
Code of 1986 as amended.
In that case, in the opinion of Blank Rome Comisky & McCauley LLP, the
following would be the material federal income tax consequences of the merger:
|X| the merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code;
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|X| no gain or loss will be recognized by Pioneer American or NBT
in the merger;
|X| no gain or loss will be recognized by the stockholders of
Pioneer American upon their receipt of NBT common stock in
exchange for their Pioneer American common stock, except that
the cash proceeds received for fractional interests in NBT
common stock will be treated as having been received as a
distribution in full payment in exchange for the fractional
share interests redeemed, as provided in Section 302(a) of the
Internal Revenue Code;
|X| the tax basis of the shares of NBT common stock (including
fractional interests) received by the Pioneer American
stockholders will be the same as the tax basis of their
Pioneer American common stock exchanged for the NBT stock; and
|X| the holding period of the NBT common stock in the hands of
former Pioneer American stockholders will include the holding
period of their Pioneer American common stock exchanged for
the NBT stock, provided the Pioneer American common stock is
held as a capital asset at the effective date of the merger.
We include the above discussion for general information only. The
discussion does not address the state, local or foreign tax aspects of the
merger. The discussion is based on currently existing provisions of the Internal
Revenue Code, existing and proposed treasury regulations and current
administrative rulings and court decisions. All of the foregoing are subject to
change and any such change could affect the continuing validity of this
discussion. Each Pioneer American stockholder should consult his or her own tax
advisor with respect to the specific tax consequences of the merger to him or
her, including the application and effect of state, local and foreign tax laws.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
NBT common stock trades on the Nasdaq National Market under the symbol
"NBTB." Following the merger, the shares of NBT common stock will continue to
trade on the Nasdaq National Market under that symbol. Pioneer American common
stock trades on the over-the-counter market under the symbol "PAHC.OB."
Following the merger, NBT will deregister the Pioneer American common stock
under the Exchange Act, and the common stock of Pioneer American will cease
trading in the over-the-counter market.
The following table has been restated to reflect the payment by NBT on
December 15, 1999 of a 5% stock dividend and sets forth for the periods
indicated (1) the range of high and low sales prices of the NBT common stock and
the Pioneer American common stock, and (2) the amount of cash dividends declared
per share by each company:
<TABLE>
<CAPTION>
NBT PIONEER AMERICAN
------------------------------------ ------------------------------------
SALES PRICES SALE PRICE
--------------------- ----------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
1998
<S> <C> <C> <C> <C> <C> <C>
First Quarter $19.05 $15.99 $ 0.117 $23.50 $21.38 $0.190
Second Quarter 23.48 18.37 0.154 25.25 22.50 0.190
Third Quarter 23.81 17.58 0.154 24.50 22.00 0.190
Fourth Quarter 24.29 19.72 0.162 23.50 22.00 0.200
1999
First Quarter $23.33 $19.89 $ 0.162 $22.50 $19.00 $ 0.200
Second Quarter 21.19 19.05 0.162 28.00 19.13 0.200
Third Quarter 20.90 16.43 0.162 26.00 20.75 0.200
Fourth Quarter 17.98 14.63 0.170 30.00 23.50 0.200
2000
First Quarter (through
__________, 2000)
</TABLE>
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The timing and amount of future dividends will depend upon earnings,
cash requirements, the financial condition of NBT and its subsidiaries (and,
prior to completion of the merger, of Pioneer American and its subsidiary
insofar as Pioneer American dividends are concerned), applicable government
regulations, and other factors deemed relevant by the NBT Board (and by the
Pioneer American Board prior to completion of the merger). As described under
"Regulation and Supervision -- Dividend Restrictions," various federal and state
laws limit the ability of affiliated banks to pay dividends to NBT and Pioneer
American. The merger agreement restricts the cash dividends payable on Pioneer
American common stock pending completion of the merger. See "The Issuance of NBT
Common Stock in the Merger and Ratification of the Merger Agreement -- Conduct
of Business Pending Completion the Merger."
On December 7, 1999, the last full trading day prior to the public
announcement of the proposed merger, the highest sales price of NBT common stock
was $16.75 per share, the lowest sales price of NBT common stock was $16.25 per
share and the last reported sales price of NBT common stock was $16.25 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. The preceding stock quotations reflect NBT's payment on
December 15, 1999 of a 5% stock dividend. We urge stockholders to obtain current
market quotations prior to making any decisions with respect to the merger.
On December 7, 1999, the last full trading day prior to the public
announcement of the proposed merger, the highest sales price of Pioneer American
common stock was $XX.xx per share, the lowest sales price of Pioneer American
common stock was $XX.xx per share and the last reported sales price of Pioneer
American common stock was $27.75 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 Pioneer American common stock was $ per share.
We urge stockholders to obtain current market quotations prior to making any
decisions with respect to the merger.
As of , 2000, there were holders of record of NBT common stock and
holders of record of Pioneer American common stock.
DESCRIPTION OF NBT CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
NBT's current authorized stock consists of 30,000,000 shares of common
stock, $.01 par value per share and 2,500,000 shares of preferred stock, $.01
par value per share, none of which are outstanding. The NBT Board is authorized
to issue, without further stockholder approval, preferred stock from time to
time in one or more series, and to determine the provisions applicable to each
series, including, the number of shares, dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption, sinking fund
provisions, redemption price or prices, and liquidation preferences. As of ,
2000, XX,xxx,XXX shares of NBT common stock were outstanding.
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COMMON STOCK
Under Delaware law, stockholders generally are not personally liable
for a corporation's acts or debts. Subject to the preferential rights of any
other shares or series of capital stock, holders of shares of NBT common stock
are entitled to receive dividends on shares of common stock if, as and when
authorized and declared by the NBT Board out of funds legally available for
dividends and to share ratably in the assets of NBT legally available for
distribution to its stockholders in the event of its liquidation, dissolution or
winding-up after payment of, or adequate provision for, all known debts and
liabilities of NBT.
Each outstanding share of NBT common stock entitles the holder to one
vote on all matters submitted to a vote of stockholders, including the election
of directors. Unless a larger vote is required by law, the NBT certificate of
incorporation or the NBT bylaws, when a quorum is present at a meeting of
stockholders, a majority of the votes properly cast upon any question other than
the election of directors shall decide the question. A plurality of the votes
properly cast for the election of a person to serve as a director shall elect
such person. Except as otherwise required by law or except as provided with
respect to any other class or series of capital stock, the holders of NBT common
stock possess the exclusive voting power. There is no cumulative voting in the
election of directors. The NBT Board is classified into three categories with
each category equal in number. This means, in general, that one-third of the
members of the NBT Board are subject to reelection at each annual meeting of
stockholders.
Holders of NBT common stock have no conversion, sinking fund or
redemption rights, or preemptive rights to subscribe for any of NBT's classes of
stock.
All shares of NBT common stock have equal dividend, distribution,
liquidation and other rights, and have no preference, appraisal or exchange
rights.
For a description of the provisions of the NBT Certificate of
Incorporation that may have the effect of delaying, deferring or preventing a
change in control of NBT, see "Comparison of Stockholders' Rights --
Restrictions upon Certain Business Combinations."
PREFERRED STOCK
The NBT Board is authorized, without any further vote or action by the
NBT stockholders, to issue shares of preferred stock in one or more series, to
establish the number of shares in each series and to fix the designation,
powers, preferences and rights of each such series and the qualifications,
limitations or restrictions of the series, in each case, if any, as are
permitted by Delaware law. Because the NBT Board has the power to establish the
preferences and rights of each class or series of preferred stock, it may afford
the stockholders of any series or class of preferred stock preferences, powers
and rights, voting or otherwise, senior to the rights of holders of shares of
NBT common stock. The issuance of shares of preferred stock could have the
effect of delaying, deferring or preventing a change in control of NBT.
STOCKHOLDER RIGHTS PLAN
In November 1994, NBT adopted a stockholder rights plan designed to
ensure that any potential acquiror of NBT would negotiate with the NBT Board and
that all NBT stockholders would be treated equitably in the event of a takeover
attempt. At that time, NBT paid a dividend of one Preferred Share Purchase Right
for each outstanding share of NBT common stock. Similar rights are attached to
each share of NBT common stock issued after November 15, 1994, including the
shares of common stock issuable in the merger. The rights will continue to trade
with the shares of NBT common stock following adoption of the par value
amendment. Under the rights plan, the rights will not be exercisable until a
person or group acquires beneficial ownership of 20 percent or more of the NBT
outstanding common stock, begins a tender or exchange offer for 25 percent or
more of the NBT common stock, or an adverse person, as declared by the NBT
Board, acquires 10 percent or more of the NBT common stock. Additionally, until
the occurrence of such an event, the rights are not severable from the NBT
common stock and therefore, the rights will transfer upon the transfer of shares
of the NBT common stock. Upon the occurrence of such events, each right entitles
the holder to purchase one one-hundredth of a share of NBT Series R Preferred
Stock, $.01 par value per share, at a price of $100. The rights plan also
provides that upon the occurrence of certain specified events
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the holders of rights will be entitled to acquire additional equity interests in
NBT or in the acquiring entity, such interests having a market value of two
times the right's exercise price of $100. The rights expire November 14, 2004,
and are redeemable in whole, but not in part, at NBT's option prior to the time
they become exercisable, for a price of $0.01 per right. The rights have certain
anti-takeover effects. The rights may cause substantial dilution to a person or
group that attempts to acquire NBT on terms not approved by the NBT Board. The
rights should not interfere with any merger or other business combination
approved by the NBT Board.
REGISTRAR AND TRANSFER AGENT
NBT's registrar and transfer agent is American Stock Transfer and Trust
Company, New York, New York.
COMPARISON OF STOCKHOLDERS' RIGHTS
Upon completion of the merger, the stockholders of Pioneer American
will become stockholders of NBT. The rights of Pioneer American stockholders are
presently governed by Pennsylvania law, the Pioneer American Articles of
Incorporation and the Pioneer American bylaws. As stockholders of NBT following
the merger, the rights of former Pioneer American stockholders will be governed
by Delaware law, the NBT Certificate of Incorporation and the NBT bylaws. The
following chart summarizes the material differences between the rights of
holders of Pioneer American common stock prior to and after completion of the
merger. You can obtain copies of the governing corporate instruments of NBT and
Pioneer American, without charge, by following the instructions listed under
"Where You Can Find More Information."
<TABLE>
<CAPTION>
PIONEER AMERICAN STOCKHOLDERS' PIONEER AMERICAN STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
- ---------------------------- ------------------------------------------ --------------------------------------------
<S> <C> <C>
Special Meeting of Under Pioneer American's Bylaws, special Stockholders may call a special meeting of
Stockholders meetings of the stockholders may be stockholders at the written request of the
called at any time by the board of holders of at least 50% of all shares
directors or by any three or more entitled to vote at the meeting.
stockholders entitled to cast at least
twenty-five (25%) of the vote which all
stockholders are entitled to cast at a
particular meeting.
- ---------------------------- ------------------------------------------ --------------------------------------------
Inspection of Voting List Stockholders may inspect a list of Stockholders may inspect a list of
of Stockholders stockholders entitled to vote at a stockholders at least ten days before the
meeting of stockholders at the time and meeting for which the list was prepared
place of the meeting and during the and at the time and place of the meeting
whole time of the meeting. and during the whole time of the meeting.
- ---------------------------- ------------------------------------------ --------------------------------------------
Classification of the The Pioneer American Board is divided The NBT Board is divided into three
Board of Directors into four classes, with directors in classes, with directors in each class being
each class being elected for staggered elected for staggered three-year terms.
four-year terms.
- ---------------------------- ------------------------------------------ --------------------------------------------
Election of the Board of Directors are elected by a plurality of Directors are elected by a plurality of
Directors the votes cast. the votes cast.
- ---------------------------- ------------------------------------------ --------------------------------------------
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PIONEER AMERICAN STOCKHOLDERS' PIONEER AMERICAN STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
- ---------------------------- ------------------------------------------ --------------------------------------------
Removal of Directors Stockholders may remove a director Stockholders may remove a director only
only for cause by the affirmative vote for cause by the affirmative vote of a
of at least 75% of shareholders entitled majority in voting power of the
to cast votes. stockholders entitled to vote and to be
present at the meeting called for such
purpose.
- -------------------------- ------------------------------------------ --------------------------------------------
Vacancies on the Board of Stockholders may fill vacancies, created Stockholders may fill vacancies at a
Directors by stockholders' removal of a director, stockholders' meeting. Directors may fill
at a stockholders' meeting. Directors vacancies by a majority vote of the
may fill vacancies, including vacancies directors then in office. The director
resulting from an increase in the number chosen by the current directors to fill
of directors, by a majority vote of the the vacancy holds the office until the
directors then in office. The director time of the next election of directors, at
chosen by the current directors to fill which point the stockholders shall fill
the vacancy holds the office for the the vacancy for the remainder of the
unexpired term of the class to which unexpired term of office. Directors may
they are elected. also fill newly-created directorships
other than an increase by more than three
in the number of directors.
- ---------------------------- ------------------------------------------ --------------------------------------------
Liability of Directors Directors are not personally liable to Directors are not personally liable to NBT
Pioneer American or its stockholders for or its stockholders for monetary damages
monetary damages for any action taken for breaches of fiduciary duty, except (1)
or for any failure to take any action, for breach of the director's duty of
unless the director has breached or loyalty, (2) for acts and omissions not in
failed to perform his or her fiduciary good faith or which involve intentional
duties of loyalty, good faith and due misconduct or a knowing violation of law,
care and the breach or failure to (3) for unlawful payments of dividends or
perform constitutes self-dealing, unlawful stock purchases or redemptions or
willful misconduct or recklessness. (4) for any transaction where the director
The foregoing does not apply to the received an improper personal benefit.
responsibility or liability of a
director pursuant to a criminal
statute or the liability of a
director for the payment of
taxes pursuant to local, state or
federal law.
- ---------------------------- ------------------------------------------ --------------------------------------------
Indemnification of A Pioneer American director, officer, An NBT director or officer is entitled to
Directors, Officers, employee or agent is entitled to indemnification if he or she acted in good
Employees or Agents indemnification if he or she acted in faith and in a manner he or she reasonably
good faith and in a manner he or she believed to be in, or not opposed to, the
reasonably believed to be in, or not best interest of NBT and, with respect to
opposed to, the best interest of Pioneer any criminal action or proceeding, had no
American and, with respect to any reasonable cause to believe his or her
criminal action or proceeding, conduct was unlawful.
had no reasonable cause to believe his
or her conduct was unlawful.
- ---------------------------- ------------------------------------------ --------------------------------------------
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PIONEER AMERICAN STOCKHOLDERS' PIONEER AMERICAN STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
- ---------------------------- ------------------------------------------ --------------------------------------------
Restrictions upon No merger, consolidation, liquidation or Any business combination involving NBT
Certain Business dissolution of Pioneer American nor any or a subsidiary and a major stockholder or
Combinations action that would result in the sale or affiliate requires the affirmative vote of
other disposition of all or substantially the holders of not less than 80% of the
all of the assets of Pioneer American outstanding shares of NBT common stock,
shall be valid unless first approved by exluding the shares owned by the major
the affirmative vote of the holders of stockholder and its affiliates. The
70% of the outstanding shares of certificate defines "major stockholder"
Pioneer American common stock. as any person who beneficially owns 5% or
more of NBT's voting stock. This provision
will not apply to a business combination
involving a major stockholder or its
affiliate if the business combination is
approved by two-thirds of directors who
were directors prior to the time when the
major stockholder became a major stockholder.
- ---------------------------- ------------------------------------------ --------------------------------------------
Mergers, Share Exchanges No merger, consolidation, liquidation or Any business combination that does not
or Asset Sales dissolution of Pioneer American nor involve a major stockholder or an
any action that would result in the sale affiliate requires such vote, if any, as
or other disposition of all or may be required by Delaware law.
substantially all of the assets of
Pioneer American shall be valid unless
first approved by the affirmative
vote of the holders of 70% of the
outstanding shares of Pioneer
American common stock.
- ---------------------------- ------------------------------------------ --------------------------------------------
Amendments to Certificate Amendments which are proposed by Amendments generally require approval of a
or Articles of stockholders, and which have not been majority of the outstanding stock entitled
Incorporation previously approved by the Board of to vote upon the amendment. Any amendment
Directors, shall require the affirmative to Article ELEVENTH relating to business
vote of at least 75% of the votes which combinations requires the affirmative vote
stockholders are entitled to cast. Any of at least 80% of the outstanding shares
amendment to Article 12, relating to of voting stock, and if there is a major
business combinations, requires the stockholder, such 80% vote must include
affirmative vote of the holders of 70% the affirmative vote of at least 80% of
of the outstanding shares of Pioneer the outstanding shares of voting stock
American common stock. held by stockholders other than the major
stockholder and its affiliates.
- ---------------------------- ------------------------------------------ --------------------------------------------
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PIONEER AMERICAN STOCKHOLDERS' PIONEER AMERICAN STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
- ---------------------------- ------------------------------------------ --------------------------------------------
Amendments to Bylaws A majority of the directors may make, A majority of the directors, or
amend or repeal the bylaws. stockholders holding a majority of the
outstanding shares entitled to vote, may
make, amend or repeal the bylaws. The
NBT bylaws permit the stockholders to
adopt, approve or designate bylaws that
may not be amended, altered or repealed
except by a specified percentage in interest
of all the stockholders or of a particular
class of stockholders.
- ---------------------------- ------------------------------------------ --------------------------------------------
Appraisal/Dissenters' Pioneer American stockholders have Stockholders generally do not have
Rights dissenters' rights to be paid in appraisal rights.
cash the fair value of their Pioneer
American shares as a result of a
business combination.
- ---------------------------- ------------------------------------------ --------------------------------------------
</TABLE>
The following discussion summarizes in further detail the material
differences between the rights of holders of Pioneer American common stock and
holders of NBT common stock. This summary does not purport to be complete and we
qualify the summary in its entirety by reference to the Pioneer American
Articles of Incorporation, the Pioneer American bylaws, the NBT Certificate of
Incorporation and the NBT bylaws and the relevant provisions of Pennsylvania and
Delaware law.
SPECIAL MEETINGS OF STOCKHOLDERS
The Pioneer American bylaws provide that the board of directors or by
any three or more stockholders entitled to cast at least 25% of the shares
entitled to vote at a particular meeting may call special meetings of the
Pioneer American stockholders.
The NBT bylaws provide that the board of directors, the chairman of the
board of directors, or the holders of not less than 50% of all the shares
entitled to vote at the meeting may call special meetings of the stockholders.
INSPECTION OF VOTING LIST OF STOCKHOLDERS
Pennsylvania law requires Pioneer American's transfer agent to make a
complete list of the stockholders entitled to vote at any meeting of Pioneer
American stockholders, arranged in alphabetical order, with the address of and
number of shares held by each stockholder. This list shall be produced and kept
open at the time and place of the meeting and shall be subject to the inspection
of any stockholder during the whole time of the meeting.
The NBT bylaws provide that the secretary will make available a list of
stockholders entitled to notice of a stockholders meeting for inspection by any
stockholder, at least ten days before the meeting and continuing through the
meeting. In addition, any stockholder of record that is entitled to vote at that
meeting is entitled to inspect the list at any time during the meeting or at any
adjournment. Delaware law provides that any stockholder shall, upon written
demand under oath stating the purpose of the demand, have the right during usual
business hours to inspect for any proper purpose the corporation's stock ledger,
a list of stockholders, and its other books and records, and to make copies or
extracts from this material.
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CUMULATIVE VOTING
Neither the Pioneer American Articles of Incorporation nor the NBT
Certificate of Incorporation permits stockholders to cumulate their votes for
the election of directors.
PREEMPTIVE RIGHTS
Neither Pioneer American stockholders nor NBT stockholders have a
preemptive right to acquire or subscribe to any or all additional issues of the
corporation's stock.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Both the Pioneer American Articles of Incorporation and the NBT
Certificate of Incorporation provide that their respective boards of directors
are to be classified and divided into four classes in the case of Pioneer
American and three classes in the case of NBT, as nearly equal in number as
possible, with the directors in each class being elected for staggered four-year
terms and three-year terms, respectively.
ELECTION OF THE BOARD OF DIRECTORS
Under Pennsylvania law, candidates for Pioneer American director who
receive the highest number of votes shall be elected. If at a meeting of Pioneer
American stockholders, directors of more than one class are to be elected, each
class of directors shall be elected in a separate election.
The NBT bylaws provide that a nominee for director is elected by a
plurality of the votes present in person or by proxy and entitled to vote in the
election at a stockholders meeting at which a quorum is present.
REMOVAL OF DIRECTORS
The Pioneer American bylaws provide that the stockholders may remove,
only for cause, the entire board of directors, any class of directors or any
individual director by the affirmative vote of at least 75% of the stockholders
entitled to vote at a meeting called for this purpose.
The NBT bylaws, together with applicable Delaware law, provide that the
stockholders may remove any director at any time, only for cause, by the
affirmative vote of a majority in voting power of the stockholders entitled to
vote and to be present in person or by proxy at a special meeting of such
stockholders for such purposes and at which a quorum is present.
ADDITIONAL DIRECTORS AND VACANCIES ON THE BOARD OF DIRECTORS
The Pioneer American Articles of Incorporation grant the board of
directors the power to fix and determine the number of directors to be elected
to each of the four classes of directors. If a vacancy on the board occurs, the
majority vote of the then directors can fill a vacancy. Any director so elected
by the board of directors shall hold office until the unexpired term of the
class to which he or she was elected.
The NBT bylaws provide that the stockholders entitled to vote at an
annual meeting shall determine the number of directors. Between annual meetings,
the board of directors shall have the power to increase, by not more than three,
the number of directors. The bylaws provide that a majority of the directors
then in office may fill vacancies and newly-created directorships (but no more
than three in any one year) and if at the time of the next election of directors
by the stockholders the term of office of any vacancy or newly-created
directorship filled by the remaining directors has not expired, then the
stockholders shall fill such vacancy for the remainder of the unexpired term.
Stockholders also have the general power to fill vacancies and newly-created
directorships at a meeting called for that purpose.
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LIABILITY OF DIRECTORS
The Pioneer American bylaws provide that no director shall be
personally liable for monetary damages for any action taken or for any failure
to take any action, unless:
|X| the director has breached or failed to perform his fiduciary
duties of loyalty, good faith and due care, and
|X| the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
The above bylaw provisions do not apply to the responsibility or
liability of a director pursuant to a criminal statute or the liability of a
director for the payment of taxes pursuant to local, state or federal law.
The NBT Certificate of Incorporation provides that no director shall be
personally liable to the corporation or its stockholders for monetary damages
for breaches of fiduciary duty except where such exculpation is expressly
prohibited. The NBT Certificate of Incorporation provides that this limitation
does not apply to liability of a director in the following instances:
|X| breach of the director's duty of loyalty to the corporation or
its stockholders;
|X| acts and omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
|X| unlawful payments of dividends and unlawful stock purchases or
redemptions; or
|X| any transaction from which the director derived an improper
personal benefit.
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
The Pioneer American Articles of Incorporation provide that every
person who is or was a director, officer, employee or agent of Pioneer American
or of any other corporation which he served at the request of Pioneer American
shall be indemnified to the fullest extent permitted by Pennsylvania law against
all expenses and liabilities incurred by or imposed upon him or her.
The NBT bylaws provide that NBT shall indemnify directors and officers
against liability incurred by reason of the fact of service as such with NBT, or
by reason of the fact that they served at the request of NBT as a director or
officer of another corporation or business entity, if the person acted
|X| in good faith and
|X| with the reasonable belief that
|X| his or her conduct when acting in the official
capacity was in the best interests of the
corporation and
|X| in all other cases, the person's conduct was at
least not opposed to the best interests of the
corporation, and
|X| in any proceeding brought by a governmental entity, the person
had no reasonable cause to believe his or her conduct
was unlawful.
NBT may not, however, indemnify a director or officer against
judgments, fines or amounts paid in settlement in connection with a proceeding
by or in the right of the corporation, and may not pay expenses in any such case
in which the person was adjudged liable for negligence or misconduct in the
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performance of his or her duty to the corporation, unless the court shall
determine that such person is fairly and reasonably entitled to indemnity.
The NBT bylaws also provide for the mandatory advancement of expenses
incurred by an officer or director in defending a civil or criminal action, suit
or proceeding in advance of the final resolution of the matter upon receipt of
an undertaking by or on behalf of such officer or director to repay the amount
advanced if a court shall ultimately determine that such person is not entitled
to indemnification as authorized in the bylaws.
The NBT bylaws also provide specific deadlines for the payment by NBT
of indemnification and advancement obligations, and specifically contemplate the
filing of actions against NBT to enforce these obligations.
RESTRICTIONS UPON CERTAIN BUSINESS COMBINATIONS
The Pioneer American Articles of Incorporation require the affirmative
vote of the holders of 70% of the outstanding shares of Pioneer American common
stock to approve any of the following:
|X| any merger or consolidation of the corporation
|X| the liquidation or dissolution of the corporation
|X| any sale or other disposition of all or substantially all of
the assets of the corporation
Pioneer American is also subject to several provisions of the
Pennsylvania Business Corporation Law, which governs business combinations with
interested stockholders. Subject to exceptions:
|X| following any acquisition by any person or group of 20% of the
shares of Pioneer American common stock, the remaining
stockholders have the right to receive payment for their
shares, in cash, from such person or group in an amount equal
to the fair value of the shares, including an increment
representing a proportion of any value payable for control of
Pioneer American
|X| prohibit for five years, a business combination which includes
a merger or consolidation or a sale, lease, or exchange of
assets, with a stockholder or group of stockholders who hold
20% or more of the shares of Pioneer American common stock
One of the exceptions to the 5-year prohibition of a business combination is the
approval by the Pioneer American Board of the business combination, such as was
done by the Board's approval of the merger agreement described in this joint
proxy statement/prospectus.
The NBT Certificate of Incorporation requires the affirmative vote of
not less than 80% of the voting power of all outstanding shares of capital stock
of NBT entitled to vote and held by disinterested stockholders to authorize or
to approve any of the following business combinations:
|X| any merger, consolidation or other business reorganization or
combination of NBT or any of its subsidiaries with any
other corporation that is a major stockholder of NBT;
|X| any sale, lease or exchange by NBT of all or a substantial
part of its assets to or with a major stockholder;
|X| any issue of any stock or other security of NBT or any of its
subsidiaries for cash, assets or securities of a major
stockholder; and
|X| any reverse stock split of, or exchange of securities, cash or
other properties or assets or any outstanding securities of
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NBT or any of its subsidiaries or liquidation or dissolution
of NBT or any of its subsidiaries in any such case in which a
major stockholder receives any securities, cash or other
assets whether or not different from those received or
retained by any holder of securities of the same class as held
by such major stockholder.
For these purposes, the term "major stockholder" means and includes any
person, corporation, partnership, or other person or entity which, together with
its affiliates and associates (as defined at Rule 12b-2 under the Exchange Act),
beneficially owns in the aggregate 5% or more of the outstanding shares of
voting stock, and any affiliates or associates of any such person, corporation,
partnership, or other person or entity.
The term "substantial part" means more than 25% of the fair market
value of the total consolidated assets of the corporation in question, or more
than twenty-five percent of the aggregate par value of authorized and issued
voting stock of the corporation in question, as of the end of its most recent
fiscal quarter ending prior to the time the determination is being made.
The term "disinterested stockholder" means any holder of voting
securities of the company other than
|X| a major stockholder if it or any of them has a financial
interest in the transaction being voted on (except for a
financial interest attributable solely to such person's
interest as a stockholder of the company which is identical to
the interests of all stockholders of the same class) and
|X| any major stockholder (whether or not having a financial
interest described in clause (i) of this sentence) if it or
any of them has directly or indirectly proposed the
transaction, solicited proxies to vote in favor of the
transaction, financed any such solicitation of proxies or
entered into any contract, arrangement, or understanding with
any person for the voting of securities of the company in
favor of the transaction.
The certificate of incorporation further provides that the provision
shall not apply to a business combination which is approved by two-thirds of
those members of the NBT Board who were directors prior to the time when the
major stockholder became a major stockholder.
NBT is also subject to Section 203 of the Delaware General Corporation
Law, which governs business combinations with interested stockholders. Subject
to certain exceptions set forth in the law, Section 203 provides that a
corporation shall not engage in any business combination with any interested
stockholder for a three-year period following the time that such stockholder
becomes an "interested stockholder" unless:
|X| prior to such time, the board of directors of the corporation
approved either the business combination or the transaction
that resulted in the stockholder becoming an interested
stockholder;
|X| the interested stockholder acquires in the transaction in
which it became an interested stockholder at least 85% of the
voting stock of the corporation outstanding at the time the
transaction commenced (excluding certain shares); or
|X| at or subsequent to such time, the business combination is
approved by the board of directors of the corporation and by
the affirmative vote of at least two-thirds of the outstanding
voting stock which is not owned by the interested stockholder.
Except as specified in the law, Section 203 defines an interested
stockholder to mean any person that
|X| (A) is the owner of 15% or more of the outstanding voting
stock of the corporation or
|X| (B) is an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of
the corporation at any time within three years immediately
prior to the relevant date, or any affiliate or associate of
such person referred to in (A) or (B) of this sentence.
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Under certain circumstances, Section 203 makes it more difficult for an
interested stockholder to effect various business combinations with a
corporation for a three-year period, although the stockholders may, by adopting
an amendment to the corporation's charter or bylaws, elect not to be governed by
this section, effective one year after adoption. NBT has not made this election.
MERGERS, SHARE EXCHANGES OR ASSET SALES
Other than as discussed in the previous section, the Pioneer American
Articles of Incorporation are silent regarding a plan of merger, consolidation,
liquidation, dissolution or sale of substantially all of the assets.
Pennsylvania law requires the approval of the board of directors and the holders
of a majority of the outstanding shares of Pioneer American common stock, for a
particular transaction to be effective, unless the Articles of Incorporation
require a higher stockholder vote.
Other than as discussed in the previous section, the NBT Certificate of
Incorporation is silent regarding a plan of merger, consolidation, share
exchange, sale of all or substantially all of NBT's assets, and the like. The
provisions of the Delaware General Corporation Law govern these transactions.
Delaware law generally requires the approval of the directors and the
affirmative vote of the holders of a majority of the outstanding stock entitled
to vote on the proposal for the particular transaction to be effective, unless
the certificate of incorporation requires a higher stockholder vote. In
addition, Delaware law provides that action by the stockholders of the surviving
corporation in a merger is not necessary if each of the following conditions is
satisfied:
|X| the agreement of merger does not amend in any respect the
certificate of incorporation of such constituent
corporation;
|X| each share of stock of such constituent corporation
outstanding immediately prior to the effective date of the
merger is to be an identical outstanding or treasury share of
the surviving corporation after the effective date of the
merger; and
|X| either (x) no shares of common stock of the surviving
corporation and no shares, securities or obligations
convertible into such stock are to be issued or delivered
under the plan of merger, or (y) the authorized unissued
shares or the treasury shares of common stock of the surviving
corporation to be issued or delivered under the plan of merger
plus those initially issuable upon conversion of any other
shares, securities or obligations to be issued or delivered
under such plan do not exceed 20% of the shares of common
stock of such constituent corporation outstanding immediately
prior to the effective date of the merger.
Under Delaware law, the board of directors may also effect without a
stockholder vote a merger into NBT of a corporation of which 90% or more of the
outstanding stock entitled to vote on the merger is owned by NBT.
AMENDMENTS TO CERTIFICATE AND ARTICLES OF INCORPORATION
The Pioneer American Articles of Incorporation provide that amendments
which are proposed by stockholders, and which have not been previously approved
by the Pioneer American Board, shall require the affirmative vote of at least
75% of the votes which stockholders are entitled to cast. Any amendment to
Article 12, relating to business combinations, requires the affirmative vote of
the holders of at least 70% of the outstanding shares of Pioneer American common
stock.
The NBT Certificate of Incorporation provides that, except as stated in
the next succeeding sentence, the laws of Delaware shall govern amendment of
NBT's Certificate of Incorporation. The Delaware General Corporation Law
provides that amendments to the certificate of incorporation require the
approval of the board of directors and the affirmative vote of a majority of the
outstanding stock entitled to vote on the amendment, together with the vote of a
majority of the outstanding shares of a particular class in certain
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circumstances specified in the statute. NBT's Certificate of Incorporation
states that amendment or repeal of Article ELEVENTH (regarding business
combinations with a major stockholder) requires the affirmative vote of not less
than 80% of the outstanding shares of NBT's voting stock; provided that if there
is a major stockholder as defined by Article ELEVENTH, such 80% vote must
include the affirmative vote of at least 80% of the outstanding shares of voting
stock held by stockholders other than the major stockholder.
AMENDMENTS TO BYLAWS
The Pioneer American bylaws provide that a majority of the directors
may amend or repeal the bylaws. Under Pennsylvania law, the stockholders can
change any amendment to the bylaws made by the board of directors.
The NBT bylaws provide that a majority of the directors may amend or
repeal the NBT bylaws. The stockholders of NBT may amend or repeal the bylaws by
a vote of a majority of the total number of issued and outstanding shares
entitled to vote. The NBT bylaws state that the stockholders may provide that
certain bylaws adopted, approved or designated by them may not be amended,
altered or repealed except by a certain specified percentage in interest of all
the stockholders or of a particular class of stockholders. The enforceability of
that provision under Delaware law is unclear.
APPRAISAL/DISSENTERS' RIGHTS
The holders of record of Pioneer American common stock as of the
effective time of the merger will have dissenters' rights with respect to the
merger. See "Rights of Dissenting Stockholders."
Under the Delaware General Corporation Law, appraisal rights are
available in connection with a statutory merger or consolidation except in
certain specified situations. Unless otherwise provided in the certificate of
incorporation, no appraisal rights are available to holders of shares of any
class of stock which is either:
|X| listed on a national securities exchange or designated as a
national market system security on an inter-dealer
quotation system by the NASD or
|X| held of record by more than 2,000 stockholders, unless such
stockholders are required by the terms of the merger to
accept anything other than:
|X| shares of stock of the surviving corporation;
|X| shares of stock of another corporation which are or
will be so listed on a national securities exchange
or designated as a national market system security on
an inter-dealer quotation system by the NASD or held
of record by more than 2,000 stockholders;
|X| cash in lieu of fractional shares of such stock; or
|X| any combination of the foregoing.
NBT's Certificate of Incorporation makes no provision for appraisal
rights; thus, the provisions of Delaware law set forth above are applicable to
NBT and its stockholders.
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RIGHTS OF DISSENTING STOCKHOLDERS
NBT stockholders will not be entitled to appraisal rights under
Delaware law.
Pioneer American stockholders will have dissenters' rights to dissent
from the merger agreement and obtain the fair value of their Pioneer American
shares in cash in accordance with the procedures established by Pennsylvania
law.
Any Pioneer American stockholder who contemplates exercising a holder's
right to dissent is urged to read carefully the provisions of Subchapter D of
Chapter 15 of the Pennsylvania Business Corporation Law attached to this joint
proxy statement/prospectus as Appendix D. The following is a summary of the
steps to be taken if the right to dissent is to be exercised, and should be read
in connection with the full text of the law found at Appendix D. A dissenting
stockholder must take each step in the indicated order and in strict compliance
with the provisions of the law in order to perfect dissenters' rights. The
failure of a Pioneer American stockholder to comply with these procedural steps
will result in the stockholder receiving NBT shares in exchange for Pioneer
American shares based on the exchange ratio in the event that the merger is
completed. See "The Issuance of NBT Common Stock in the Merger and Ratification
of the Merger Agreement - Merger Consideration."
Any written notice of demand which is required in connection with the
exercise of dissenters' rights, whether before or after the effective date of
the merger, must be sent to Pioneer American Holding Company Corp., 41 North
Main Street, Carbondale, Pennsylvania 18407, Attention: Chief Executive Officer.
STEP ONE - NOTICE OF INTENTION TO DISSENT
A Pioneer American stockholder must file with Pioneer American, prior
to the vote on the merger agreement at the Pioneer American special meeting, a
written notice of intention to demand payment in cash of the fair value of such
holder's Pioneer American stock if the merger is consummated. Such stockholder
cannot change in any manner the ownership of the Pioneer American stock from the
date of this notice through to the effective date of the merger and must refrain
from voting his, her or its Pioneer American stock for approval of the merger
agreement. Neither a proxy nor a vote against approval of the merger will
constitute the necessary written notice of intention to dissent.
STEP TWO - NOTICE TO DEMAND PAYMENT
If the merger agreement is approved by the Pioneer American
stockholders, Pioneer American will mail a notice to all dissenters who gave
notice under Step One above and who refrained from voting for approval of the
merger agreement. This notice will state where and when: (1) a dissenter must
send written demand for payment; and (2) the dissenters' stock certificates are
to be deposited. This notice will include a form for this demand and another
copy of the Pennsylvania law that is found at Appendix D.
STEP THREE - FAILURE TO COMPLY WITH THE NOTICE TO DEMAND PAYMENT
A dissenter who fails to send back to Pioneer American the notice to
demand payment and deposit his or her stock certificates by the deadline stated
on the form of notice to demand payment will forfeit his or her dissenters'
rights for a cash payment and receive NBT shares.
STEP FOUR - PAYMENT OF FAIR VALUE OF PIONEER AMERICAN SHARES
After the effective time of the merger, NBT will give to dissenters
notice of the estimated fair value of their Pioneer American shares and pay such
amount or indicate that no remittance accompanies the notice. In addition, this
notice will include:
106
<PAGE>
|X| a closing balance sheet and statement of income of Pioneer
American for the most recent fiscal year and calendar
quarterly period;
|X| a statement expressing the estimate of the fair value of the
Pioneer American shares; and
|X| a notice of the right of a dissenter to demand a supplemental
payment under Pennsylvania law and another copy of the
Pennsylvania law which we attach as Appendix D.
STEP FIVE - ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES
If a dissenter feels that the estimated value or the amount sent is
less than the fair value, a dissenter may send to NBT his or her own estimate of
the fair value of the Pioneer American shares, which is deemed to be a demand
for payment of the amount of the deficiency. If NBT remits payment of its
estimated value and the dissenter does not file his or her own estimate within
30 days after the mailing of such payment to the dissenter, then the dissenter
will be entitled to no more than the amount mailed to him or her.
STEP SIX - VALUATION PROCEEDINGS
If any demands for payment remain unsettled within 60 days after the
latest to occur of:
|X| the effective date of the merger;
|X| receipt of Pioneer American or NBT of any demands for payment;
or
|X| receipt by Pioneer American or NBT of any estimates by
dissenters of the fair value;
then NBT may file an application in the Court of Common Pleas of Lackawanna
County, Pennsylvania, requesting that the fair value of the Pioneer American
stock be determined by the court. In such case, all dissenters, wherever
residing, whose demands have not been settled, shall be made parties to the
proceeding. A copy of this court application will be served on each dissenter
who has not settled.
If NBT fails to file the application, then any dissenter, on behalf of
all dissenters who have made a demand and who have not settled their claims, may
file the application in the name of Pioneer American within a 30-day period
after the expiration of the above 60-day period and request the fair value be
determined by the court. The fair value determined by the court need not equal
the dissenters' estimate of fair value. If no dissenter files such an
application, then each dissenter entitled to do so shall be paid Pioneer
American's estimate of the fair value and may only start a legal action to
recover any amount not previously remitted plus interest at a rate that the
court finds fair.
NBT, after the effective date of the merger, intends to negotiate in
good faith with any dissenting stockholders. If, after negotiation, a claim
cannot be settled, then NBT intends to file an application requesting that the
fair value be determined by the court.
The costs and expenses of any valuation proceeding in the court,
including the reasonable compensation and expenses of any appraiser appointed by
the court, will be determined by the court and assessed against NBT after the
merger, except that any part of the costs and expenses may be apportioned and
assessed against all or any of the dissenters who are parties to the proceeding
and whose actions the court funds to be dilatory, obdurate, arbitrary, vexatious
or in bad faith.
PIONEER AMERICAN STOCKHOLDERS CONSIDERING SEEKING APPRAISAL BY
EXERCISING THEIR DISSENTERS' RIGHTS SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR
PIONEER AMERICAN COMMON STOCK DETERMINED UNDER PENNSYLVANIA LAW COULD BE MORE
THAN, THE SAME AS, OR LESS THAN THEIR PRO RATA SHARE OF THE MERGER CONSIDERATION
THAT THEY ARE ENTITLED TO RECEIVE UNDER THE MERGER AGREEMENT IF THEY DO NOT SEEK
APPRAISAL OF THEIR PIONEER AMERICAN COMMON STOCK.
107
<PAGE>
The foregoing discussion is not a complete statement of the procedures
to be followed by Pioneer American stockholders desiring to exercise appraisal
rights and, because exercise of such rights requires strict adherence to the
relevant provisions of the Pennsylvania Business Corporation Law, each
stockholder desiring to exercise appraisal rights is advised individually to
consult the law (as provided in Appendix D to this joint proxy statement/
prospectus) and comply with the relevant provisions of the law.
Pioneer American stockholders wishing to exercise their dissenters'
rights should consult their own counsel to ensure that they fully and properly
comply with the requirements of Pennsylvania law.
OTHER MATTERS
STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS
Stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange
Act for inclusion in NBT's proxy statement for the 2001 Annual Meeting of
Stockholders must be received by NBT by November 15, 2000. Each proposal must
comply with the requirements as to form and substance established by the SEC for
such a proposal to be included in the proxy statement and form of proxy. SEC
rules set forth standards as to what stockholder proposals corporations must
include in a proxy statement for an annual meeting.
OTHER MATTERS
As of the date of this joint proxy statement/prospectus, the NBT Board
knows of no matters that will be presented for consideration at the NBT meeting
other than as described in this joint proxy statement/prospectus. If any other
matters shall properly come before the NBT meeting and be voted upon, the
enclosed proxies will be deemed to confer discretionary authority on the
individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the management of NBT.
As of the date of this joint proxy statement/prospectus, the Pioneer
American Board knows of no matters that will be presented for consideration at
the Pioneer American meeting other than as described in this joint proxy
statement/prospectus. If any other matters shall properly come before the
Pioneer American meeting and be voted upon, the enclosed proxies will be deemed
to confer discretionary authority on the individuals named as proxies therein to
vote the shares represented by such proxies as to any such matters. The persons
named as proxies intend to vote or not to vote in accordance with the
recommendation of the management of Pioneer American.
LEGAL MATTERS
The validity of the common stock to be issued in connection with the
merger will be passed upon by Duane, Morris & Heckscher LLP, Washington, D.C.
Blank Rome Comisky & McCauley LLP, Philadelphia, Pennsylvania, counsel for
Pioneer American, will pass on certain federal income tax consequences of the
merger.
EXPERTS
The consolidated financial statements of NBT as of December 31, 1998
and 1997 and for each of the three years in the period ended December 31, 1998
have been incorporated by reference in this joint proxy statement/prospectus and
registration statement in reliance upon the report of KPMG LLP, independent
auditors, incorporated herein by reference and upon the authority of said firm
as experts in accounting and auditing.
108
<PAGE>
The consolidated financial statements of Pioneer American as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 incorporated by reference in this joint proxy
statement/prospectus and registration statement have been audited by KPMG LLP,
independent auditors, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
NBT and Pioneer American file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
room at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at http://www.sec.gov. In
addition, you may read and copy NBT's SEC filings at the Nasdaq National Market,
1735 K Street, N.W., Washington, D.C. 20006-1500, and Pioneer American's SEC
filings at Nasdaq, 1735 K Street, N.W., Washington, D.C. 20006-1500. Our
Internet addresses are www.nbtbank.com with respect to NBT and
www.pioneeramerican.com with respect to Pioneer American.
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 Pioneer American 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 Pioneer American for the NBT annual meeting and the
Pioneer American special meeting. As allowed by SEC rules, this joint proxy
statement/prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
joint proxy statement/prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
joint proxy statement/prospectus, except for any information superseded by
information in this joint proxy statement/prospectus. This joint proxy
statement/prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about the companies, their finances and NBT common stock.
NBT BANCORP INC. SEC FILINGS
|X| Annual Report on Form 10-K for the year ended December 31,
1998;
|X| Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999, and September 30, 1999; and
|X| Current Reports on Form 8-K, filed with the SEC on August 19,
1999, September 13, 1999, and December 16, 1999.
PIONEER AMERICAN HOLDING COMPANY CORP. SEC FILINGS
|X| Annual Report on Form 10-K for the year ended December 31,
1998;
|X| Quarterly Reports on Form 10-Q for the quarters ended March
31, 1999, June 30, 1999, and September 30, 1999; and
|X| Current Report on Form 8-K, filed with the SEC on January 4, 2000.
109
<PAGE>
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 Pioneer American
has supplied all such information relating to Pioneer American.
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. Pioneer American Holding Company Corp.
52 South Broad Street 41 North Main Street
Norwich, New York 13815 Carbondale, PA 18407
Attention: Michael J. Chewens, CPA Attention: Patricia A. Cobb, Esq.
Tel: (607) 337-6520 Tel: (570) 282-8045
If you would like to request documents from us, please do so by
, 2000 to receive them prior to the NBT annual meeting and Pioneer American
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 PIONEER AMERICAN PROPOSAL. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS. THIS JOINT PROXY STATEMENT/PROSPECTUS IS DATED , 2000. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND
NEITHER THE MAILING OF THIS JOINT PROXY STATEMENT/PROSPECTUS TO STOCKHOLDERS NOR
THE ISSUANCE OF SHARES OF NBT COMMON STOCK IN THE MERGER SHALL CREATE ANY
IMPLICATION TO THE CONTRARY.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined balance sheet presents
the financial position of NBT, Lake Ariel and Pioneer American as of September
30, 1999, assuming that each merger had occurred as of September 30, 1999, after
giving effect to certain pro forma adjustments described in the accompanying
notes. The following unaudited pro forma combined statements of income for the
nine months ended September 30, 1999 and 1998, and years ended December 31,
1998, 1997, and 1996 present the combined historical results of operations of
NBT, Lake Ariel and Pioneer American as if each merger had been consummated as
of the first day of the period presented. Pro forma earnings per common share
are based on the exchange ratio of 0.9961 with respect to the Lake Ariel merger
and 1.805 with respect to the Pioneer American merger. The fiscal years of NBT,
Lake Ariel and Pioneer American end December 31. The unaudited pro forma
combined balance sheet reflects estimated non-recurring charges that will be
incurred in connection with the mergers.
The unaudited pro forma combined financial statements were prepared
giving effect to each merger on the pooling of interests accounting method.
Under this method of accounting, the recorded assets, liabilities, stockholders'
equity, income and expense of NBT, Lake Ariel and Pioneer American are combined
and reflected at their historical amounts, except as noted in the accompanying
notes.
110
<PAGE>
The combined company expects to achieve certain merger benefits in the
form of operating expense reductions and revenue enhancements. The unaudited pro
forma combined statements of income do not reflect potential operating expense
reductions or revenue enhancements that are expected to result from the merger,
and therefore may not be indicative of the results of future operations. No
assurance can be given with respect to the ultimate level of operating expense
reductions or revenue enhancements.
The unaudited pro forma combined financial statements should be read in
conjunction with, and are qualified in their entirety by, the historical
consolidated financial statements and accompanying notes of NBT, which we
incorporate by reference herein, and of Pioneer American, which we include in
this Joint Proxy Statement/Prospectus. The unaudited pro forma combined
financial statements are presented for informational purposes only. These
statements are not necessarily indicative of the combined financial position and
results of operations that would have occurred if the mergers had been
consummated on September 30, 1999 or at the beginning of the periods or that may
be attained in the future.
111
<PAGE>
<TABLE>
<CAPTION> UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AT SEPTEMBER 30, 1999
------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
(in thousands)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 44,801 $ 12,940 $ -- $ 57,741
Loans held for sale 3,511 440 -- 3,951
Securities available for sale, at fair value 355,137 173,438 -- 528,575
Securities held to maturity (fair value-NBT Bancorp Inc
$41,215, Lake Ariel Bancorp, Inc. $44,944 and Pioneer
American Holding Company Corp. $36,750) 41,216 47,297 -- 88,513
Loans:
Commercial and agricultural 432,950 110,165 -- 543,115
Real estate mortgage 174,204 107,200 -- 281,404
Consumer 291,514 63,503 -- 355,017
------------------------------------------------------------------
Total loans 898,668 280,868 -- 1,179,536
Less allowance for loan losses 13,555 2,546 -- 16,101
------------------------------------------------------------------
Net loans 885,113 278,322 -- 1,163,435
Premises and equipment, net 20,853 19,408 -- 40,261
Intangible assets, net 6,828 2,731 -- 9,559
Other assets 20,800 18,341 2,000 41,141
------------------------------------------------------------------
TOTAL ASSETS $ 1,378,259 $ 552,917 $ 2,000 $ 1,933,176
==================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 157,618 $ 58,111 $ -- $ 215,729
Savings, NOW, and money market 386,245 100,114 -- 486,359
Time 550,610 183,809 -- 734,419
------------------------------------------------------------------
Total deposits 1,094,473 342,034 -- 1,436,507
Short-term borrowings 113,163 32,614 -- 145,777
Long-term debt 35,161 138,204 -- 173,365
Other liabilities 7,583 5,257 7,200 20,040
------------------------------------------------------------------
Total liabilities 1,250,380 518,109 7,200 1,775,689
------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock -- -- -- --
Common stock 13,016 1,021 4,441 18,478
Capital surplus 111,221 30,012 7,174 148,407
Retained earnings 23,540 9,193 (16,815) 15,918
Accumulated other comprehensive income (loss) (7,117) (5,418) -- (12,535)
Common stock in treasury at cost (12,781) -- -- (12,781)
------------------------------------------------------------------
Total stockholders' equity 127,879 34,808 (5,200) 157,487
------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,378,259 $ 552,917 $ 2,000 $ 1,933,176
==================================================================
</TABLE>
112
<PAGE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1999
---------------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING COMPANY ADJUSTMENTS COMBINED PRO
CORP. FORMA
(in thousands)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 15,844 $ -- $ 73,585
Loans held for sale -- -- 3,951
Securities available for sale, at fair value 115,547 -- 644,122
Securities held to maturity (fair value-NBT Bancorp Inc
$41,215, Lake Ariel Bancorp, Inc. $44,944 and Pioneer
American Holding Company Corp. $36,750) 37,444 -- 125,957
Loans:
Commercial and agricultural 101,464 -- 644,579
Real estate mortgage 79,376 -- 360,780
Consumer 59,726 -- 414,743
---------------------------------------------------
Total loans 240,566 -- 1,420,102
Less allowance for loan losses 3,000 -- 19,101
---------------------------------------------------
Net loans 237,566 -- 1,401,001
Premises and equipment, net 6,483 -- 46,744
Intangible assets, net 562 -- 10,121
Other assets 8,408 1,300 50,849
---------------------------------------------------
TOTAL ASSETS $421,854 $1,300 $2,356,330
===================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 48,808 $ -- $264,537
Savings, NOW, and money market 114,205 -- 600,564
Time 141,619 -- 876,038
---------------------------------------------------
Total deposits 304,632 -- 1,741,139
Short-term borrowings -- -- 145,777
Long-term debt 80,409 -- 253,774
Other liabilities 4,907 5,100 30,047
---------------------------------------------------
Total liabilities 389,948 5,100 2,170,737
---------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock -- -- --
Common stock 2,935 2,235 23,648
Capital surplus 11,913 (3,965) 156,355
Retained earnings 21,435 (3,800) 33,553
Accumulated other comprehensive income (loss) (2,647) -- (15,182)
Common stock in treasury at cost (1,730) 1,730 (12,781)
---------------------------------------------------
Total stockholders' equity 31,906 (3,800) 185,593
---------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $421,854 $1,300 $2,356,330
===================================================
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
113
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
-------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $ 56,076 $ 14,664 $ -- $ 70,740
Securities - taxable 18,301 7,785 -- 26,086
Securities - tax-exempt 760 1,535 -- 2,295
Other 232 125 -- 357
-------------------------------------------------------------------
Total interest and fee income 75,369 24,109 -- 99,478
-------------------------------------------------------------------
Interest expense:
Deposits 25,344 8,219 -- 33,563
Short-term borrowings 3,882 425 -- 4,307
Long-term debt 1,098 5,061 -- 6,159
-------------------------------------------------------------------
Total interest expense 30,324 13,705 -- 44,029
-------------------------------------------------------------------
Net interest income 45,045 10,404 -- 55,449
Provision for loan losses 2,925 655 -- 3,580
-------------------------------------------------------------------
Net interest income after provision for loan losses 42,120 9,749 -- 51,869
-------------------------------------------------------------------
Noninterest income:
Trust 2,505 -- -- 2,505
Service charges on deposit accounts 3,108 1,492 -- 4,600
Net securities gains 1,507 208 -- 1,715
Other 2,086 1,885 -- 3,971
-------------------------------------------------------------------
Total noninterest income 9,206 3,585 -- 12,791
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 14,166 4,223 -- 18,389
Office supplies and postage 1,330 431 -- 1,761
Occupancy 2,109 1,068 -- 3,177
Equipment 1,974 1,082 -- 3,056
Professional fees and outside services 2,010 408 -- 2,418
Data processing and communications 2,843 199 -- 3,042
Amortization of intangible assets 745 229 -- 974
Other operating 2,763 1,714 -- 4,477
-------------------------------------------------------------------
Total noninterest expense 27,940 9,354 -- 37,294
-------------------------------------------------------------------
Income before income taxes 23,386 3,980 -- 27,366
Income taxes 9,030 955 -- 9,985
-------------------------------------------------------------------
Net income $ 14,356 $ 3,025 $ -- $ 17,381
===================================================================
Weighted Average Shares Outstanding:
Basic 13,022 4,840 -- 17,843
Diluted 13,165 4,971 -- 18,117
Earnings per share:
Basic $ 1.10 $ 0.63 $ -- $ 0.97
Diluted $ 1.09 $ 0.61 $ -- $ 0.96
</TABLE>
114
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
-----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $ 14,642 $ -- $ 85,382
Securities - taxable 6,167 -- 32,253
Securities - tax-exempt 943 -- 3,238
Other 198 -- 555
---------------------------------------------
Total interest and fee income 21,950 -- 121,428
---------------------------------------------
Interest expense:
Deposits 7,918 -- 41,481
Short-term borrowings -- -- 4,307
Long-term debt 3,246 -- 9,405
---------------------------------------------
Total interest expense 11,164 -- 55,193
---------------------------------------------
Net interest income 10,786 -- 66,235
Provision for loan losses 280 -- 3,860
---------------------------------------------
Net interest income after provision for loan losses 10,506 -- 62,375
---------------------------------------------
Noninterest income:
Trust -- -- 2,505
Service charges on deposit accounts 1,199 -- 5,799
Net securities gains 88 -- 1,803
Other 829 -- 4,800
---------------------------------------------
Total noninterest income 2,116 -- 14,907
---------------------------------------------
Noninterest expense:
Salaries and employee benefits 4,038 -- 22,427
Office supplies and postage 409 -- 2,170
Occupancy 806 -- 3,983
Equipment 731 -- 3,787
Professional fees and outside services 738 -- 3,156
Data processing and communications 335 -- 3,377
Amortization of intangible assets 29 -- 1,003
Other operating 1,370 -- 5,847
---------------------------------------------
Total noninterest expense 8,456 -- 45,750
---------------------------------------------
Income before income taxes 4,166 -- 31,532
Income taxes 1,110 -- 11,095
---------------------------------------------
Net income $ 3,056 $ -- $ 20,437
=============================================
Weighted Average Shares Outstanding:
Basic 2,914 -- 23,104
Diluted 2,942 -- 23,427
Earnings per share:
Basic $ 1.05 $ -- $ 0.88
Diluted $ 1.04 $ -- $ 0.87
See accompanying notes to the unaudited pro forma combined financial statements.
</TABLE>
115
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $ 52,701 $ 13,765 $ -- $ 66,466
Securities - taxable 22,233 6,521 -- 28,754
Securities - tax-exempt 836 1,282 -- 2,118
Other 210 124 -- 334
------------------------------------------------------------------
Total interest and fee income 75,980 21,692 -- 97,672
------------------------------------------------------------------
Interest expense:
Deposits 28,423 8,077 -- 36,500
Short-term borrowings 4,525 102 -- 4,627
Long-term debt 326 4,180 -- 4,506
------------------------------------------------------------------
Total interest expense 33,274 12,359 -- 45,633
------------------------------------------------------------------
Net interest income 42,706 9,333 -- 52,039
Provision for loan losses 3,550 490 -- 4,040
------------------------------------------------------------------
Net interest income after provision for loan losses 39,156 8,843 -- 47,999
------------------------------------------------------------------
Noninterest income:
Trust 2,407 -- -- 2,407
Service charges on deposit accounts 2,725 1,114 -- 3,839
Net securities gains 613 80 -- 693
Other 1,883 2,039 -- 3,922
------------------------------------------------------------------
Total noninterest income 7,628 3,233 -- 10,861
------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 14,214 3,663 -- 17,877
Office supplies and postage 1,406 443 -- 1,849
Occupancy 2,037 958 -- 2,995
Equipment 1,728 880 -- 2,608
Professional fees and outside services 1,987 332 -- 2,319
Data processing and communications 2,635 160 -- 2,795
Amortization of intangible assets 817 123 -- 940
Other operating 3,824 1,479 -- 5,303
------------------------------------------------------------------
Total noninterest expense 28,648 8,038 -- 36,686
------------------------------------------------------------------
Income before income taxes 18,136 4,038 -- 22,174
Income taxes 3,623 930 -- 4,553
------------------------------------------------------------------
Net income $ 14,513 $ 3,108 $ -- $ 17,621
==================================================================
Weighted Average Shares Outstanding:
Basic 13,241 4,791 -- 18,014
Diluted 13,509 4,911 -- 18,401
Earnings per share:
Basic $ 1.10 $ 0.65 $ -- $ 0.98
Diluted $ 1.07 $ 0.64 $ -- $ 0.96
</TABLE>
116
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $14,277 $ -- $ 80,743
Securities - taxable 5,824 -- 34,578
Securities - tax-exempt 828 -- 2,946
Other 253 -- 587
---------------------------------------------
Total interest and fee income 21,182 -- $118,854
---------------------------------------------
Interest expense:
Deposits 8,002 -- 44,502
Short-term borrowings 23 -- 4,650
Long-term debt 2,590 -- 7,096
---------------------------------------------
Total interest expense 10,615 -- 56,248
---------------------------------------------
Net interest income 10,567 -- 62,606
Provision for loan losses 450 -- 4,490
---------------------------------------------
Net interest income after provision for loan losses 10,117 -- 58,116
---------------------------------------------
Noninterest income:
Trust -- -- 2,407
Service charges on deposit accounts 1,035 -- 4,874
Net securities gains 298 -- 991
Other 757 -- 4,679
---------------------------------------------
Total noninterest income 2,090 -- 12,951
---------------------------------------------
Noninterest expense:
Salaries and employee benefits 3,989 -- 21,866
Office supplies and postage 382 -- 2,231
Occupancy 769 -- 3,764
Equipment 563 -- 3,171
Professional fees and outside services 797 -- 3,116
Data processing and communications 355 -- 3,150
Amortization of intangible assets 29 -- 969
Other operating 1,246 -- 6,549
---------------------------------------------
Total noninterest expense 8,130 -- 44,816
---------------------------------------------
Income before income taxes 4,077 -- 26,251
Income taxes 1,109 -- 5,662
---------------------------------------------
Net income $ 2,968 $ -- $ 20,589
=============================================
Weighted Average Shares Outstanding:
Basic 2,890 -- 23,230
Diluted 2,953 -- 23,730
Earnings per share:
Basic $ 1.03 $ -- $ 0.89
Diluted $ 1.01 $ -- $ 0.87
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
117
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
-----------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $ 70,947 $ 18,452 $ -- $ 89,399
Securities - taxable 28,742 8,848 -- 37,590
Securities - tax-exempt 1,086 1,694 -- 2,780
Other 305 226 -- 531
-------------------------------------------------------------------
Total interest and fee income 101,080 29,220 -- 130,300
-------------------------------------------------------------------
Interest expense:
Deposits 37,201 10,857 -- 48,058
Short-term borrowings 6,014 139 -- 6,153
Long-term debt 462 5,744 -- 6,206
-------------------------------------------------------------------
Total interest expense 43,677 16,740 -- 60,417
-------------------------------------------------------------------
Net interest income 57,403 12,480 -- 69,883
Provision for loan losses 4,599 1,130 -- 5,729
-------------------------------------------------------------------
Net interest income after provision for loan losses 52,804 11,350 -- 64,154
-------------------------------------------------------------------
Noninterest income:
Trust 3,115 -- -- 3,115
Service charges on deposit accounts 3,749 1,576 -- 5,325
Net securities gains 624 432 -- 1,056
Other 2,491 2,926 -- 5,417
-------------------------------------------------------------------
Total noninterest income 9,979 4,934 -- 14,913
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 19,202 5,013 -- 24,215
Office supplies and postage 1,912 609 -- 2,521
Occupancy 2,843 1,288 -- 4,131
Equipment 2,375 1,219 -- 3,594
Professional fees and outside services 2,836 539 -- 3,375
Data processing and communications 3,577 217 -- 3,794
Amortization of intangible assets 1,070 210 -- 1,280
Other operating 5,313 2,357 -- 7,670
-------------------------------------------------------------------
Total noninterest expense 39,128 11,452 -- 50,580
-------------------------------------------------------------------
Income before income taxes 23,655 4,832 -- 28,487
Income taxes 4,553 1,061 -- 5,614
-------------------------------------------------------------------
Net income $ 19,102 $ 3,771 $ -- $ 22,873
===================================================================
Weighted Average Shares Outstanding:
Basic 13,198 4,796 -- 17,976
Diluted 13,474 4,906 -- 18,361
Earnings per share:
Basic $ 1.45 $ 0.79 $ -- $ 1.27
Diluted $ 1.42 $ 0.77 $ -- $ 1.25
</TABLE>
118
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
-----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $19,093 $ -- $108,492
Securities - taxable 7,615 -- 45,205
Securities - tax-exempt 1,114 -- 3,894
Other 480 -- 1,011
---------------------------------------------
Total interest and fee income 28,302 -- 158,602
---------------------------------------------
Interest expense:
Deposits 10,840 -- 58,898
Short-term borrowings 23 -- 6,176
Long-term debt 3,456 -- 9,662
---------------------------------------------
Total interest expense 14,319 -- 74,736
---------------------------------------------
Net interest income 13,983 -- 83,866
Provision for loan losses 420 -- 6,149
---------------------------------------------
Net interest income after provision for loan losses 13,563 -- 77,717
---------------------------------------------
Noninterest income:
Trust -- -- 3,115
Service charges on deposit accounts 1,404 -- 6,729
Net securities gains 511 -- 1,567
Other 1,046 -- 6,463
---------------------------------------------
Total noninterest income 2,961 -- 17,874
---------------------------------------------
Noninterest expense:
Salaries and employee benefits 5,071 -- 29,286
Office supplies and postage 506 -- 3,027
Occupancy 1,027 -- 5,158
Equipment 773 -- 4,367
Professional fees and outside services 1,027 -- 4,402
Data processing and communications 483 -- 4,277
Amortization of intangible assets 39 -- 1,319
Other operating 2,041 -- 9,711
---------------------------------------------
Total noninterest expense 10,967 -- 61,547
---------------------------------------------
Income before income taxes 5,557 -- 34,044
Income taxes 1,535 -- 7,149
---------------------------------------------
Net income $ 4,022 $ -- $ 26,895
=============================================
Weighted Average Shares Outstanding:
Basic 2,894 -- 23,199
Diluted 2,953 -- 23,691
Earnings per share:
Basic $ 1.39 $ -- $ 1.16
Diluted $ 1.36 $ -- $ 1.14
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
119
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
-------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $ 64,781 $ 16,907 $ -- $ 81,688
Securities - taxable 29,887 5,892 -- 35,779
Securities - tax-exempt 1,179 1,578 -- 2,757
Other 334 273 -- 607
-------------------------------------------------------------------
Total interest and fee income 96,181 24,650 -- 120,831
-------------------------------------------------------------------
Interest expense:
Deposits 35,234 10,395 -- 45,629
Short-term borrowings 6,581 112 -- 6,693
Long-term debt 707 3,018 -- 3,725
-------------------------------------------------------------------
Total interest expense 42,522 13,525 -- 56,047
-------------------------------------------------------------------
Net interest income 53,659 11,125 -- 64,784
Provision for loan losses 3,505 780 -- 4,285
-------------------------------------------------------------------
Net interest income after provision for loan losses 50,154 10,345 -- 60,499
-------------------------------------------------------------------
Noninterest income:
Trust 2,675 -- -- 2,675
Service charges on deposit accounts 3,695 1,247 -- 4,942
Net securities gains (losses) (337) 214 -- (123)
Other 2,033 1,940 -- 3,973
-------------------------------------------------------------------
Total noninterest income 8,066 3,401 -- 11,467
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 17,905 4,206 -- 22,111
Office supplies and postage 1,801 449 -- 2,250
Occupancy 2,598 1,156 -- 3,754
Equipment 1,700 932 -- 2,632
Professional fees and outside services 2,201 284 -- 2,485
Data processing and communications 2,789 177 -- 2,966
Amortization of intangible assets 1,351 154 -- 1,505
Other operating 4,825 1,852 -- 6,677
-------------------------------------------------------------------
Total noninterest expense 35,170 9,210 -- 44,380
-------------------------------------------------------------------
Income before income taxes 23,050 4,536 -- 27,586
Income taxes 8,301 1,105 -- 9,406
-------------------------------------------------------------------
Net income $ 14,749 $ 3,431 $ -- $ 18,180
===================================================================
Weighted Average Shares Outstanding:
Basic 13,176 3,935 -- 17,095
Diluted 13,335 4,073 -- 17,393
Earnings per share:
Basic $ 1.12 $ 0.88 $ -- $ 1.06
Diluted $ 1.11 $ 0.84 $ -- $ 1.05
</TABLE>
120
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $18,101 $ -- $ 99,789
Securities - taxable 7,063 -- 42,842
Securities - tax-exempt 1,023 -- 3,780
Other 320 -- 927
----------------------------------------------
Total interest and fee income 26,507 -- 147,338
----------------------------------------------
Interest expense:
Deposits 11,337 -- 56,966
Short-term borrowings 10 -- 6,703
Long-term debt 1,498 -- 5,223
----------------------------------------------
Total interest expense 12,845 -- 68,892
----------------------------------------------
Net interest income 13,662 -- 78,446
Provision for loan losses 535 -- 4,820
----------------------------------------------
Net interest income after provision for loan losses 13,127 -- 73,626
----------------------------------------------
Noninterest income:
Trust -- -- 2,675
Service charges on deposit accounts 1,397 -- 6,339
Net securities gains (losses) 157 -- 34
Other 907 -- 4,880
----------------------------------------------
Total noninterest income 2,461 -- 13,928
----------------------------------------------
Noninterest expense:
Salaries and employee benefits 5,040 -- 27,151
Office supplies and postage 507 -- 2,757
Occupancy 1,026 -- 4,780
Equipment 685 -- 3,317
Professional fees and outside services 900 -- 3,385
Data processing and communications 456 -- 3,422
Amortization of intangible assets 39 -- 1,544
Other operating 1,427 -- 8,104
----------------------------------------------
Total noninterest expense 10,080 -- 54,460
----------------------------------------------
Income before income taxes 5,508 -- 33,094
Income taxes 1,500 -- 10,906
----------------------------------------------
Net income $ 4,008 $ -- $ 22,188
==============================================
Weighted Average Shares Outstanding:
Basic 2,850 -- 22,239
Diluted 2,939 -- 22,698
Earnings per share:
Basic $ 1.41 $ -- $ 1.00
Diluted $ 1.36 $ -- $ 0.98
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
121
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
-------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $ 57,660 $ 14,592 $ -- $ 72,252
Securities - taxable 25,109 4,409 -- 29,518
Securities - tax-exempt 1,527 1,104 -- 2,631
Other 91 170 -- 261
-------------------------------------------------------------------
Total interest and fee income 84,387 20,275 -- 104,662
-------------------------------------------------------------------
Interest expense:
Deposits 31,942 8,957 -- 40,899
Short-term borrowings 3,745 83 -- 3,828
Long-term debt 678 1,143 -- 1,821
-------------------------------------------------------------------
Total interest expense 36,365 10,183 -- 46,548
-------------------------------------------------------------------
Net interest income 48,022 10,092 -- 58,114
Provision for loan losses 3,175 650 -- 3,825
-------------------------------------------------------------------
Net interest income after provision for loan losses 44,847 9,442 -- 54,289
-------------------------------------------------------------------
Noninterest income:
Trust 2,642 -- -- 2,642
Service charges on deposit accounts 3,372 1,217 -- 4,589
Net securities gains 1,179 43 -- 1,222
Other 1,669 1,446 -- 3,115
-------------------------------------------------------------------
Total noninterest income 8,862 2,706 -- 11,568
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 17,817 3,684 -- 21,501
Office supplies and postage 1,796 483 -- 2,279
Occupancy 2,391 909 -- 3,300
Equipment 1,765 824 -- 2,589
Professional fees and outside services 2,382 337 -- 2,719
Data processing and communications 2,280 144 -- 2,424
Amortization of intangible assets 1,580 108 -- 1,688
Other operating 4,411 1,508 -- 5,919
-------------------------------------------------------------------
Total noninterest expense 34,422 7,997 -- 42,419
-------------------------------------------------------------------
Income before income taxes 19,287 4,151 -- 23,438
Income taxes 7,108 1,120 -- 8,228
-------------------------------------------------------------------
Net income $ 12,179 $ 3,031 $ -- $ 15,210
===================================================================
Weighted Average Shares Outstanding:
Basic 13,058 3,860 -- 16,903
Diluted 13,140 3,870 -- 16,995
Earnings per share:
Basic $ 0.93 $ 0.78 $ -- $ 0.90
Diluted $ 0.93 $ 0.78 $ -- $ 0.89
</TABLE>
122
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
<S> <C> <C> <C>
Interest and fee income:
Loans and loans held for sale $ 18,345 $ -- $ 90,597
Securities - taxable 5,144 -- 34,662
Securities - tax-exempt 595 -- 3,226
Other 274 -- 535
----------------------------------------------
Total interest and fee income 24,358 -- 129,020
----------------------------------------------
Interest expense:
Deposits 10,799 -- 51,698
Short-term borrowings 57 -- 3,885
Long-term debt 18 -- 1,839
----------------------------------------------
Total interest expense 10,874 -- 57,422
----------------------------------------------
Net interest income 13,484 -- 71,598
Provision for loan losses 500 -- 4,325
----------------------------------------------
Net interest income after provision for loan losses 12,984 -- 67,273
----------------------------------------------
Noninterest income:
Trust -- -- 2,642
Service charges on deposit accounts 1,227 -- 5,816
Net securities gains -- -- 1,222
Other 785 -- 3,900
----------------------------------------------
Total noninterest income 2,012 -- 13,580
----------------------------------------------
Noninterest expense:
Salaries and employee benefits 5,061 -- 26,562
Office supplies and postage 536 -- 2,815
Occupancy 857 -- 4,157
Equipment 622 -- 3,211
Professional fees and outside services 738 -- 3,457
Data processing and communications 408 -- 2,832
Amortization of intangible assets 39 -- 1,727
Other operating 1,488 -- 7,407
----------------------------------------------
Total noninterest expense 9,749 -- 52,168
----------------------------------------------
Income before income taxes 5,247 -- 28,685
Income taxes 1,543 -- 9,771
----------------------------------------------
Net income $ 3,704 $ -- $ 18,914
==============================================
Weighted Average Shares Outstanding:
Basic 2,812 -- 21,979
Diluted 2,932 -- 22,287
Earnings per share:
Basic $ 1.32 $ -- $ 0.86
Diluted $ 1.26 $ -- $ 0.85
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
123
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) Pro forma earnings per common share (EPS) have been calculated
based on the weighted average number of shares of NBT plus additional shares of
NBT assumed to be issued in the merger in exchange for the weighted average
outstanding shares of Lake Ariel for each applicable period based on the
exchange ratio of .9961.
(2) The pro forma entries to record the issuance of .9961 shares of NBT
Common Stock in exchange for each share of Lake Ariel Common Stock and to record
the adjustment of the stated value of Lake Ariel Common Stock from $.21 to $1.00
as of September 30, 1999 were determined as follows:
<TABLE>
<S> <C> <C>
NBT Common Shares issued 13,015,789
Lake Ariel Common Shares issued
(4,859,771 common shares times exchange ratio of .9961) 4,840,818
---------------
Combined pro forma total common shares issued 17,856,607
Stated value per common share $ 1.00
---------------
Combined pro forma total stated value $ 17,856,607
Actual par value of common stock at September 30, 1999:
NBT $ 13,015,789
Lake Ariel 1,020,552 $ 14,036,341
--------------- ---------------
Entry to record increase in stated value:
Capital Surplus $ 3,820,266
Common Stock $ 3,820,266
Entry to record 5% stock dividend to NBT Bancorp Inc. shareholders of record at
December 1, 1999 that NBT paid on December 15, 1999. To record issuance of
621,143 shares at a value of $18.70 per share.
Retained Earnings $ 11,615,374
Common Stock $ 621,143
Surplus $ 10,994,231
Summary of pro forma entries above
Retained Earnings $ 11,615,374
Common Stock $ 4,441,409
Surplus $ 7,173,965
</TABLE>
For purposes of the above calculations, it is assumed that no dissenters' shares
existed.
124
<PAGE>
(3) Authorized, issued and outstanding share information is as follows
at September 30, 1999:
<TABLE>
<CAPTION>
- --------------------------------------- ---------------------- --------------------- -------------------------------
NBT LAKE ARIEL NBT/LAKE ARIEL PRO FORMA
- --------------------------------------- ---------------------- --------------------- -------------------------------
<S> <C> <C> <C>
Preferred
- --------------------------------------- ---------------------- --------------------- -------------------------------
Authorized 2,500,000 1,000,000 2,500,000
- --------------------------------------- ---------------------- --------------------- -------------------------------
Issued and Outstanding ----- ----- -----
- --------------------------------------- ---------------------- --------------------- -------------------------------
Common
- --------------------------------------- ---------------------- --------------------- -------------------------------
Stated Value $1.00 $.21 $1.00
- --------------------------------------- ---------------------- --------------------- -------------------------------
Authorized 15,000,000 10,000,000 15,000,000 (A)
- --------------------------------------- ---------------------- --------------------- -------------------------------
Issued 13,636,932 4,859,771 18,477,750
- --------------------------------------- ---------------------- --------------------- -------------------------------
Outstanding 13,046,443 4,859,771 17,887,261
- --------------------------------------- ---------------------- --------------------- -------------------------------
</TABLE>
(A) In conjunction with the merger, NBT will amend its Certificate
of Incorporation to provide for the authorization of an additional 15 million
shares of common stock by increasing the authorized shares from 15 million to 30
million.
(4) Pro forma entry to issue 1.805 shares of NBT Bancorp Inc. Common
Stock in exchange for each share of Pioneer American Holding Company Corp Common
Stock. The stated value of NBT Bancorp Inc. Common Stock to be issued is
determined as follows:
<TABLE>
<S> <C> <C>
NBT Bancorp Inc.\Lake Ariel Combined common shares issued 18,477,750
Pioneer American Holding Company Corp common shares issued, after
retirement of treasury stock
(2,864,307 common shares times conversion
ratio of 1.805) 5,170,074
------------------
Combined pro forma total common share issued 23,647,824
Stated value per common share $ 1.00
------------------
Combined pro forma total stated value $ 23,647,824
Actual stated value of common stock at September 30, 1999:
NBT Bancorp Inc.\Lake Ariel Combined $ 18,477,750
Pioneer American Holding Company Corp
(after retirement of treasury shares) 2,864,307 $ 21,342,057
---------------- ------------------
Required increase in stated value $ 2,305,767
==================
Entry to conform to stated value of common stock:
Surplus $ 2,305,767
Common stock $ 2,305,767
Pro forma entry to retire treasury stock held by Pioneer
(approximately 71,060 shares having a par value of $1.00 per share)
Common Stock $ 71,060
Surplus $ 1,658,739
Treasury Stock $ 1,729,799
Summary of pro forma entries above
Surplus $ 3,964,506
Common stock $ 2,234,707
Treasury Stock $ 1,729,799
</TABLE>
125
<PAGE>
(5) The unaudited pro forma combined balance sheet at September 30, 1999,
reflects anticipated merger and integration costs for both the Lake Ariel and
Pioneer American mergers. Costs related to the Lake Ariel merger are estimated
to be in the range of $6.7 million to $7.7 million ($4.7 million to $5.7 million
after taxes) and costs related to the Pioneer American merger are estimated to
be in the range of $4.6 million to $5.6 million ($3.3 million to $4.3 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 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 entries to record the anticipated merger and integration costs on the
unaudited pro forma combined balance sheet are:
LAKE ARIEL
Current Tax Receivable $ 2,000,000
Retained Earnings $ 5,200,000
Other Liabilities $ 7,200,000
PIONEER AMERICAN
Current Tax Receivable $ 1,300,000
Retained Earnings $ 3,800,000
Other Liabilities $ 5,100,000
126
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
NBT and Pioneer American 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 Pioneer American have used these statements to
describe our expectations and estimates in various sections of this Joint Proxy
Statement/Prospectus, including:
|X| Summary -- Our Reasons for the Merger;
|X| Summary -- Selected Historical and Pro Forma Combined Financial Data;
|X| The Merger -- Background of the Merger;
|X| The Merger -- Recommendation of the NBT Board and NBT's Reasons for the
Merger;
|X| The Merger -- Recommendation of the Pioneer American Board and Pioneer
American's Reasons for the Merger;
|X| The Merger -- Opinion of NBT's Financial Advisor;
|X| The Merger -- Opinion of Pioneer American's Financial Advisor; and
|X| Unaudited Pro Forma Combined Financial Statements.
Factors that might cause such differences include, but are not limited to:
the timing of closing the proposed merger being delayed; competitive pressures
among financial institutions increasing significantly; economic conditions,
either nationally or locally in areas in which NBT and Pioneer American conduct
their operations, being less favorable than expected; the cost and effort
required to integrate aspects of the operations of the companies being more
difficult than expected; expected cost savings from the proposed merger not
being fully realized or realized within the expected time frame; legislation or
regulatory changes which adversely affect the ability of the combined company to
conduct its current and future operations; and the impact of the transition to
the year 2000 on the operations of NBT, Pioneer American or the combined
company. NBT and Pioneer American 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.
127
<PAGE>
NBT BANCORP INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints [ ] and [ ], and either of them, with full
power of substitution, proxies to represent the undersigned at the Annual
Meeting of Stockholders of NBT Bancorp Inc. ("NBT") to be held at the Binghamton
Regency Hotel and Conference Center, 225 Water Street, One Sarbro Square,
Binghamton, New York on April 25, 2000 at 10:00 a.m. local time, or at any
adjournment or postponement thereof (the "Meeting"), with all power which the
undersigned would possess if personally present, and to vote all shares of NBT's
common stock which the undersigned may be entitled to vote at said meeting upon
the following proposals described in the accompanying joint proxy
statement/prospectus, in accordance with the following instructions and, at
their discretion, upon any other matters that may properly come before the
Meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED TO FIX THE
NUMBER OF DIRECTORS AT TWELVE FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR
LISTED BELOW, FOR RATIFICATION OF THE INDEPENDENT AUDITOR, AND FOR THE ISSUANCE
OF NBT COMMON STOCK IN THE MERGER AND RATIFICATION OF THE MERGER AGREEMENT.
1. Election of Directors. To fix the number of directors at twelve and elect
the nominees listed below:
[_] FOR ALL NOMINEES [_] WITHHOLD FROM ALL NOMINEES
William C. Gumble, Bruce D. Howe, Andrew S. Kowalczyk, Jr., Dan B. Marshman,
John G. Martines, John C. Mitchell
IF YOU DO NOT WISH YOUR SHARES VOTED FOR A PARTICULAR NOMINEE, DRAW A LINE
THROUGH THAT PERSON'S NAME ABOVE.
2. To ratify the Board's selection of KPMG LLP as NBT's independent auditor
for 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve the issuance by NBT of its common stock to the former stock-
holders of Pioneer American Holding Company Corp. in the merger and
ratify the Agreement and Plan of Merger, dated as of December 7, 1999, by
and between NBT and Pioneer American, which, if completed, would
result in (a) the merger of Pioneer American with a subsidiary of NBT,
(b) the subsequent merger of Pioneer American into NBT, and (c) the
issuance of 1.805 shares of NBT common stock in exchange for each share of
Pioneer American common stock, and all of the matters contemplated by the
merger agreement.
[_] FOR [_] AGAINST [_] ABSTAIN
4 The proxies are authorized to vote in their discretion upon such other
business that may properly come before the Meeting.
X Please mark your votes as in this example.
(Continued and to be signed on reverse side) SEE REVERSE SIDE
<PAGE>
(Continued from other side)
[_] Check here for address change and note change below
[_] Check here if you plan to attend the Meeting
New address: ________________________________________________
Date: _____________________ Signature(s)
__________________________________
__________________________________
__________________________________
Please sign here exactly
as name(s) appear(s) on
the left. When signing as
attorney, executor,
administrator, trustee,
guardian, or in any other
fiduciary capacity, give
full title. If more than
one person acts as
trustee, all should sign.
All joint owners must
sign.
<PAGE>
PIONEER AMERICAN HOLDING COMPANY CORP.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Daniel Corazzi, John Kuna and Basil
Telep, or any one or more of them, with full power of substitution, proxies, to
vote all of the stock of Pioneer American Holding Company Corp., which the
undersigned is entitled to vote at the Special Meeting of Stockholders of
Pioneer American to be held at Heart Lake Lodge, 1299 Heart Lake Road, Jermyn,
Pennsylvania on April 25, 2000 at 10:00 a.m. local time and at any adjournment
or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED, AS
DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE
FOLLOWING PROPOSAL.
1. To approve the Agreement and Plan of Merger, dated as of December 7, 1999,
by and between Pioneer American and NBT Bancorp Inc. ("NBT"), which would
result in the merger of Pioneer American into NBT and the issuance of 1.805
shares of NBT common stock in exchange for each share of Pioneer American
common stock, and all of the matters contemplated by the merger agreement.
[_] FOR [_] AGAINST [_] ABSTAIN
2. The proxies are authorized to vote in their discretion upon such other
business that may properly come before the Pioneer American special
meeting.
X Please mark your votes as in this example.
(Continued and to be signed on reverse side) SEE REVERSE SIDE
<PAGE>
(Continued from other side)
Date: _____________________ Signature(s)
__________________________________
__________________________________
__________________________________
Please sign here exactly
as name(s) appear(s) on
the left. When signing as
attorney, executor,
administrator, trustee,
guardian, or in any other
fiduciary capacity, give
full title. If more than
one person acts as
trustee, all should sign.
All joint owners must
sign.
I plan to attend the Special Meeting: ___________
Please mark (on reverse side), sign and date, and mail in the enclosed postage
paid envelope.
<PAGE>
AGREEMENT AND PLAN OF MERGER
AMONG
NBT BANCORP INC.
LEVON ACQUISITION COMPANY
AND
PIONEER AMERICAN HOLDING COMPANY CORP.
December 7, 1999
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
1. Combination..............................................................................................1
1.1 First Merger....................................................................................1
1.2 Effect of First Merger..........................................................................2
1.3 Second Merger...................................................................................3
1.4 Effect of Second Merger.........................................................................3
1.5 Consideration for First Merger..................................................................5
1.6 No Fractional Shares............................................................................5
1.7 Dividends; Interest.............................................................................5
1.8 Designation of Exchange Agent...................................................................6
1.9 Notice of Exchange..............................................................................7
1.10 Acts to Carry Out This Merger Plan..............................................................7
1.11 Treatment of Stock Options......................................................................7
1.12 Stock Option Agreement..........................................................................8
1.13 Executive Officers and Directors of PAHC........................................................8
1.14 Employee Benefits...............................................................................9
1.15 Voting Agreements..............................................................................10
1.16 Optional Bank Merger Transaction...............................................................10
2. Effective Time..........................................................................................11
2.1 PAHC Shareholder Approval......................................................................11
2.2 NBT Shareholder Approval.......................................................................11
2.3 Federal Reserve Approval.......................................................................11
2.4 OCC Approval...................................................................................11
2.5 Pennsylvania Department of Banking Approval....................................................11
2.6 Other Regulatory Approvals.....................................................................11
2.7 Expiration of Stays............................................................................12
2.8 Mutual Agreement...............................................................................12
3. Conditions Precedent to Performance of Obligations of the Parties.......................................12
3.1 Regulatory Approvals...........................................................................12
3.2 Registration Statement ........................................................................12
3.3 Approval by Shareholders of PAHC...............................................................12
3.4 Approval by Shareholders of NBTB...............................................................13
3.5 Federal Income Taxation........................................................................13
3.6 Adverse Legislation............................................................................13
3.7 Absence of Litigation..........................................................................13
<PAGE>
4. Conditions Precedent to Performance of the Obligations
of NBTB........................................................................................13
4.1 Representations and Warranties; Performance of Obligations.....................................14
4.2 Opinion of PAHC Counsel........................................................................14
4.3 Opinion of PAHC Litigation Counsel.............................................................14
4.4 No Adverse Development.........................................................................14
4.5 Consolidated Net Worth.........................................................................15
4.6 Loan Loss Reserve..............................................................................15
4.7 CRA Rating.....................................................................................15
4.8 Employment Agreement...........................................................................15
4.9 Releases.......................................................................................15
4.10 Accounting Treatment...........................................................................15
4.11 Affiliates' Agreement..........................................................................15
4.12 Fairness Opinion...............................................................................16
5. Conditions Precedent to Performance of Obligations of PAHC..............................................16
5.1 Representations and Warranties; Performance of Obligations.....................................16
5.2 Opinion of NBTB Counsel........................................................................16
5.3 No Adverse Developments........................................................................16
5.4 Status of NBTB Common Stock....................................................................17
5.5 Change-in-Control Agreements...................................................................17
5.6 Board of Directors.............................................................................17
5.7 Fairness Opinion...............................................................................17
5.8 Accounting Treatment...........................................................................17
6. Representations and Warranties of PAHC..................................................................17
6.1 Organization, Powers, and Qualification........................................................17
6.2 Execution and Performance of Agreement........................................................ 18
6.3 Absence of Violations..........................................................................18
6.4 Compliance with Agreements.....................................................................18
6.5 Binding Obligations............................................................................19
6.6 Absence of Default; Due Authorization..........................................................19
6.7 Compliance with BHC Act; Certain Banking Regulatory Matters....................................20
6.8 Subsidiaries...................................................................................21
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6.9 Capital Structure..............................................................................21
6.10 Articles of Incorporation, Bylaws, and Minute Books............................................22
6.11 Books and Records..............................................................................23
6.12 Regulatory Approvals and Filings, Contracts, Commitments, etc..................................23
6.13 Financial Statements...........................................................................24
6.14 Call Reports; Bank Holding Company Reports.....................................................25
6.15 Absence of Undisclosed Liabilities.............................................................25
6.16 Absence of Certain Developments................................................................25
6.17 Reserve for Possible Credit Losses.............................................................26
6.18 Tax Matters....................................................................................26
6.19 Consolidated Net Worth.........................................................................28
6.20 Examinations...................................................................................28
6.21 Reports........................................................................................28
6.22 FIRA Compliance and Other Transactions with Affiliates.........................................28
6.23 SEC Registered Securities......................................................................29
6.24 Legal Proceedings..............................................................................29
6.25 Absence of Governmental Proceedings............................................................29
6.26 Federal Deposit Insurance......................................................................29
6.27 Other Insurance................................................................................29
6.28 Labor Matters..................................................................................30
6.29 Employee Benefit Plans.........................................................................30
6.30 Compensation...................................................................................31
6.31 Fiduciary Activities...........................................................................32
6.32 Environmental Liability........................................................................32
6.33 Intangible Property............................................................................33
6.34 Real and Personal Property.....................................................................33
6.35 Loans, Leases, and Discounts...................................................................34
6.36 Material Contracts.............................................................................34
6.37 Employment and Severance Arrangements..........................................................34
6.38 Material Contract Defaults.....................................................................35
6.39 Capital Expenditures...........................................................................35
6.40 Repurchase Agreements..........................................................................35
6.41 Internal Controls: Year 2000 Problems..........................................................35
6.42 Dividends......................................................................................36
6.43 Brokers and Advisers...........................................................................36
6.44 Interest Rate Risk Management Instruments......................................................36
6.45 Accounting Treatment...........................................................................36
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<PAGE>
6.46 COBRA Matters..................................................................................37
6.47 Disclosure.....................................................................................37
6.48 Regulatory and Other Approvals.................................................................37
7. Covenants of PAHC.......................................................................................37
7.1 Rights of Access...............................................................................37
7.2 Monthly and Quarterly Financial Statements;
Minutes of Meetings and Other Materials.............................................. 38
7.3 Extraordinary Transactions.....................................................................38
7.4 Preservation of Business.......................................................................39
7.5 Comfort Letter.................................................................................40
7.6 Affiliates' Agreement..........................................................................40
7.7 Pooling Treatment..............................................................................41
7.8 Shareholders' Meeting..........................................................................41
7.9 Dividend Coordination..........................................................................41
7.10 Inconsistent Activities........................................................................41
7.11 COBRA Obligations..............................................................................42
7.12 Updated Schedules..............................................................................42
7.13 Subsequent Events..............................................................................43
8. Representations and Warranties of NBTB..................................................................43
8.1 Organization, Powers, and Qualification........................................................43
8.2 Execution and Performance of Agreement.........................................................43
8.3 Binding Obligations; Due Authorization.........................................................43
8.4 Absence of Default.............................................................................44
8.5 Capital Structure..............................................................................44
8.6 Books and Records..............................................................................45
8.7 Financial Statements...........................................................................45
8.8 Nasdaq Reporting...............................................................................45
8.9 Absence of Certain Developments................................................................46
8.10 Brokers and Advisers...........................................................................46
8.11 Disclosure.....................................................................................46
8.12 Regulatory and Other Approvals.................................................................46
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<PAGE>
9. Covenants of NBTB.......................................................................................46
9.1 Rights of Access...............................................................................47
9.2 Securities Reports.............................................................................47
9.3 Shareholders' Meeting..........................................................................47
9.4 Nasdaq Approval................................................................................47
9.5 Options........................................................................................47
9.6 Indemnification of Directors and Officers......................................................47
9.7 Subsequent Events..............................................................................48
10. Closing.................................................................................................48
10.1 Place and Time of Closing......................................................................48
10.2 Events to Take Place at Closing................................................................48
11. Termination, Damages for Breach, Waiver, and Amendment..................................................49
11.1 Termination by Reason of Lapse of Time.........................................................49
11.2 Grounds for Termination........................................................................49
11.3 Effect of Termination..........................................................................52
11.4 Waiver of Terms or Conditions..................................................................53
11.5 Amendment......................................................................................53
12. General Provisions......................................................................................53
12.1 Allocation of Costs and Expenses...............................................................53
12.2 Mutual Cooperation.............................................................................54
12.3 Form of Public Disclosures.....................................................................54
12.4 Confidentiality................................................................................54
12.5 Claims of Brokers..............................................................................55
12.6 Information for Applications and Registration Statement........................................55
12.7 Standard of Materiality and of Material Adverse Effect.........................................56
12.8 Adjustments for Certain Events.................................................................57
12.9 Counterparts...................................................................................57
12.10 Entire Agreement...............................................................................57
12.11 Survival of Representations, Warranties, and Covenants.........................................57
12.12 Section Headings...............................................................................57
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<PAGE>
12.13 Notices........................................................................................58
12.14 Choice of Law and Venue........................................................................59
12.15 Knowledge of a Party...........................................................................59
12.16 Binding Agreement..............................................................................59
</TABLE>
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<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER made as of the seventh day of December,
1999, among NBT BANCORP INC. ("NBTB"), a Delaware corporation having its
principal office in Norwich, New York, LEVON ACQUISITION COMPANY ("Newco"), a
Delaware corporation having its principal office in Norwich, New York, and
PIONEER AMERICAN HOLDING COMPANY CORP. ("PAHC"), a Pennsylvania corporation
having its principal office in Carbondale, Pennsylvania
W I T N E S S E T H T H A T :
WHEREAS, NBTB and PAHC are bank holding companies which desire to affiliate
with each other through the merger of Newco with and into PAHC, with PAHC to be
the surviving corporation (the "First Merger"), and the immediately subsequent
merger of PAHC into NBTB, with NBTB to be the surviving corporation (the "Second
Merger") (the First Merger and the Second Merger being referred to herein
collectively as the "Merger");
WHEREAS, the Board of Directors of PAHC has determined that it would be in
the best interests of PAHC, its shareholders, its customers, and the areas
served by PAHC to become affiliated with NBTB through the Merger;
WHEREAS, subject to the terms and conditions hereof, the respective Boards
of Directors of NBTB and PAHC have agreed to cause the Merger pursuant to the
provisions of section 251 et seq. of the Delaware General Corporation Law (the
"GCL") and section 1921 et seq. of the Pennsylvania Business Corporation Law
(the "BCL");
WHEREAS, the parties intend that the Merger qualify as one or more tax-free
reorganizations under section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that the business combination contemplated hereby be
accounted for under the "pooling-of-interests" accounting method; and
WHEREAS, the parties desire to make certain representations, warranties,
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth, intending to be legally bound, the parties
agree as follows:
1. COMBINATION.
1.1. FIRST MERGER. Subject to the provisions of this Agreement, on the date
and at the time to be specified in the Certificate of Merger to be filed on the
date of the Closing with the Secretary of State of the State of Delaware
pursuant to the GCL and in the Articles of Merger to be filed on the date of the
<PAGE>
Closing with the Secretary of State of the Commonwealth of Pennsylvania pursuant
to the BCL (the "Effective Time"), Newco will be merged with and into PAHC.
1.2. EFFECT OF FIRST MERGER. At the Effective Time:
(a) Newco and PAHC (the "First Merger Constituent Corporations") shall
be merged into a single corporation, which shall be PAHC. PAHC is hereby
designated as the surviving corporation in the First Merger and is hereinafter
sometimes called the "First Merger Surviving Corporation."
(b) The separate existence of Newco shall cease.
(c) The First Merger Surviving Corporation shall have all the rights,
privileges, immunities, and powers and shall assume and be subject to all the
duties and liabilities of a corporation organized under the BCL.
(d) The First Merger Surviving Corporation shall thereupon and
thereafter possess all of the rights, privileges, immunities, and franchises, of
a public as well as of a private nature, of each of the First Merger Constituent
Corporations; and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions for shares and all other choses in
action, and all and every other interest of and belonging to or due to each of
the First Merger Constituent Corporations shall be taken and deemed to be
transferred to and vested in the First Merger Surviving Corporation without
further action, act or deed; and the title to any real estate, or any interest
therein, vested in either of the First Merger Constituent Corporations shall not
revert or be in any way impaired by reason of the First Merger.
(e) The First Merger Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each of the
First Merger Constituent Corporations; and any claim existing or action or
proceeding pending by or against either of the First Merger Constituent
Corporations may be prosecuted to judgment as if the First Merger had not taken
place, or the First Merger Surviving Corporation may be proceeded against or
substituted in its place. The First Merger Surviving Corporation expressly
assumes and agrees to perform all of Newco's liabilities and obligations.
Neither the rights of creditors nor any liens upon the property of either of the
First Merger Constituent Corporations shall be impaired by the First Merger.
(f) Any taxes, penalties, and public accounts of the State of Delaware,
claimed against either of the First Merger Constituent Corporations but not
settled, assessed, or determined prior to the First Merger shall be settled,
assessed, or determined against the First Merger Surviving Corporation and,
together with interest thereon, shall be a lien against the franchises and
property, both real and personal, of the First Merger Surviving Corporation.
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<PAGE>
(g) The Certificate of Incorporation of PAHC as it exists immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
First Merger Surviving Corporation until later amended pursuant to Pennsylvania
law.
(h) The By-Laws of PAHC as they exist immediately prior to the
Effective Time shall be the By-Laws of the First Merger Surviving Corporation
until later amended pursuant to Pennsylvania law.
(i) The authorized shares of capital stock of PAHC as of the Effective
Time shall be 25,000,000 shares of Common Stock, $1.00 par value (the "PAHC
Common Stock").
(j) Subject to the terms, conditions, and limitations set forth herein,
at the Effective Time and until surrendered for exchange and payment, each
outstanding stock certificate which, prior to the Effective Time, represented
shares of the common stock, $1.00 par value, of PAHC (the "PAHC Common Stock"),
other than any shares of PAHC Common Stock held by NBTB (other than in a
fiduciary, representative, or custodial capacity), which shall be canceled
without any payment therefor, except for any dividends declared prior to the
Effective Time but not yet paid as of the Effective Time, and other than shares
of PAHC Common Stock held by PAHC, which shall be canceled without any payment
therefor, shall, by virtue of this Agreement and without any action on the part
of the holder or holders thereof, cease to represent an issued and existing
share and shall be converted into a right to receive from NBTB, and shall for
all purposes represent the right to receive, upon surrender of the certificate
formerly representing such shares, a certificate representing the number of
shares of NBTB Common Stock specified in section 1.5 of this Agreement; provided
that, with respect to any matters relating to stock certificates representing
PAHC Common Stock, NBTB may rely conclusively upon the record of stockholders
maintained by PAHC containing the names and addresses of the holders of record
of PAHC's Common Stock at the Effective Time.
(k) All shares of capital stock of Newco outstanding at the Effective
Time shall be converted into and exchanged for 100 shares of common stock of the
First Merger Surviving Corporation, and any shares of capital stock of Newco
held in the treasury of Newco shall be canceled.
1.3. SECOND MERGER. Subject to the provisions of this Agreement, on the
date of the Effective Time, and at such time subsequent to the Effective Time on
such date as shall be designated by NBTB, which date and time shall be specified
in the Certificate of Merger to be filed on the date of the Closing with the
Secretary of State of the State of Delaware pursuant to the GCL and in the
Articles of Merger to be filed on the date of the Closing with the Secretary of
State of the Commonwealth of Pennsylvania pursuant to the BCL (the "Second
Merger Effective Time"), PAHC will be merged with and into NBTB.
1.4. EFFECT OF SECOND MERGER. At the Second Merger Effective Time:
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<PAGE>
(a) PAHC and NBTB (the "Second Merger Constituent Corporations") shall
be merged into a single corporation, which shall be NBTB. NBTB is hereby
designated as the surviving corporation in the Second Merger and is hereinafter
sometimes called the "Second Merger Surviving Corporation."
(b) The separate existence of PAHC shall cease.
(c) The Second Merger Surviving Corporation shall have all the rights,
privileges, immunities, and powers and shall assume and be subject to all the
duties and liabilities of a corporation organized under the GCL.
(d) The Second Merger Surviving Corporation shall thereupon and
thereafter possess all of the rights, privileges, immunities, and franchises, of
a public as well as of a private nature, of each of the Second Merger
Constituent Corporations; and all property, real, personal and mixed, and all
debts due on whatever account, including subscriptions for shares and all other
choses in action, and all and every other interest of and belonging to or due to
each of the Second Merger Constituent Corporations shall be taken and deemed to
be transferred to and vested in the Second Merger Surviving Corporation without
further action, act or deed; and the title to any real estate, or any interest
therein, vested in either of the Second Merger Constituent Corporations shall
not revert or be in any way impaired by reason of the Second Merger.
(e) The Second Merger Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each of the
Second Merger Constituent Corporations; and any claim existing or action or
proceeding pending by or against either of the Second Merger Constituent
Corporations may be prosecuted to judgment as if the Second Merger had not taken
place, or the Second Merger Surviving Corporation may be proceeded against or
substituted in its place. The Second Merger Surviving Corporation expressly
assumes and agrees to perform all of PAHC's liabilities and obligations. Neither
the rights of creditors nor any liens upon the property of either of the Second
Merger Constituent Corporations shall be impaired by the Second Merger.
(f) Any taxes, penalties, and public accounts of the Commonwealth of
Pennsylvania, claimed against either of the Second Merger Constituent
Corporations but not settled, assessed, or determined prior to the Second Merger
shall be settled, assessed, or determined against the Second Merger Surviving
Corporation and, together with interest thereon, shall be a lien against the
franchises and property, both real and personal, of the Second Merger Surviving
Corporation.
(g) The Certificate of Incorporation of NBTB as it exists immediately
prior to the Second Merger Effective Time shall be the Certificate of
Incorporation of the Second Merger Surviving Corporation until later amended
pursuant to Delaware law.
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<PAGE>
(h) The By-Laws of NBTB as they exist immediately prior to the Second
Merger Effective Time shall be the By-Laws of the Second Merger Surviving
Corporation until later amended pursuant to Delaware law.
(i) The authorized shares of capital stock of NBTB as of the Second
Merger Effective Time shall be that number of shares of preferred stock as exist
immediately prior to the Second Merger Effective Date, with a par value or no
par value and, if applicable, a stated value as exist immediately prior to the
Second Merger Effective Date, and that number of shares of common stock as exist
immediately prior to the Second Merger Effective Date, with a par value or no
par value and, if applicable, a stated value as exist immediately prior to the
Second Merger Effective Date (the "NBTB Common Stock").
(j) At the Second Merger Effective Time, all the shares of PAHC shall
be canceled and only the shares of the Second Merger Surviving Corporation shall
remain as validly issued shares of the Second Merger Surviving Corporation,
fully paid and nonassessable.
1.5. CONSIDERATION FOR FIRST MERGER. Subject to the terms, conditions, and
limitations set forth herein (including the procedures specified in section
11.2(d)(ii) of this Agreement), as a result of the First Merger, each share of
PAHC Common Stock other than shares of PAHC Common Stock held by NBTB (other
than in a fiduciary, representative, or custodial capacity) or by PAHC shall be
converted into the right to receive, in exchange for each share of PAHC Common
Stock held of record as of the Effective Time, 1.805 shares of NBTB Common Stock
(the "Exchange Ratio").
1.6. NO FRACTIONAL SHARES. NBTB will not issue fractional shares of its
stock. In lieu of fractional shares of NBTB Common Stock, if any, each
shareholder of PAHC who is entitled to a fractional share of NBTB Common Stock
shall receive an amount of cash equal to the product of such fraction times the
average of the closing bid price and the closing asked price per share for NBTB
Common Stock as reported on the Nasdaq National Market (or, in the absence
thereof, as reported by or determined by reference to such other source upon
which NBTB and PAHC shall agree) for each of the twenty consecutive trading days
ending on and including the eighth trading day before the Effective Time (the
"Average Closing Price"). Such fractional share interest shall not include the
right to vote or to receive dividends or any interest thereon.
1.7. DIVIDENDS; INTEREST. No shareholder of PAHC will be entitled to receive
dividends on his, her or its NBTB Common Stock until he, she or it exchanges
his, her or its certificates representing PAHC Common Stock for NBTB Common
Stock. Any dividends declared on NBTB Common Stock to holders of record on or
after the Effective Time shall, with respect to stock to be delivered pursuant
to this Agreement to shareholders of PAHC who have not exchanged their
certificates representing PAHC Common Stock for NBTB Common Stock, be paid to
the Exchange Agent (as designated in section 1.8 of this Agreement) and, upon
receipt from a former shareholder of PAHC of certificates representing shares of
-5-
<PAGE>
PAHC Common Stock, the Exchange Agent shall forward to such former shareholder
of PAHC (i) certificates representing his, her or its shares of NBTB Common
Stock, (ii) dividends declared thereon subsequent to the Effective Time (without
interest) and (iii) the cash value of any fractional shares determined in
accordance with section 1.6 hereof.
1.8. DESIGNATION OF EXCHANGE AGENT.
(a) The parties to this Agreement hereby designate American Stock
Transfer and Trust Company, New York, New York ("AST") as Exchange Agent to
effect the exchanges contemplated hereby.
(b) NBTB will, promptly after the Effective Time, issue and deliver to
AST the share certificates representing shares of NBTB Common Stock (each a "New
Certificate") and the cash to be paid to holders of PAHC Common Stock in
accordance with this Agreement.
(c) If any New Certificate is to be issued in a name other than that in
which the certificate formerly representing PAHC Common Stock (an "Old
Certificate") and surrendered for exchange was issued, the Old Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and the person requesting such exchange shall pay to AST any transfer or other
taxes required by reason of the issuance of the New Certificate in any name
other than that of the registered holder of the Old Certificate surrendered, or
establish to the satisfaction of AST that such tax has been paid or is not
payable.
(d) In the event that any Old Certificates have not been surrendered
for exchange in accordance with this Agreement on or before the second
anniversary of the Effective Time, NBTB may at any time thereafter, with or
without notice to the holders of record of such Old Certificates, sell for the
accounts of any or all of such holders any or all of the shares of NBTB Common
Stock which such holders are entitled to receive under Section 1.5 hereof (the
"Unclaimed Shares"). Any such sale may be made by public or private sale or sale
at any broker's board or on any securities exchange in such manner and at such
times as NBTB shall determine. If, in the opinion of counsel for NBTB, it is
necessary or desirable, any Unclaimed Shares may be registered for sale under
the Securities Act of 1933, as amended (the "Securities Act") and applicable
state laws. NBTB shall not be obligated to make any sale of Unclaimed Shares if
it shall determine not to do so, even if notice of sale of the Unclaimed Shares
has been given. The net proceeds of any such sale of Unclaimed Shares shall be
held for holders of the unsurrendered Old Certificates whose Unclaimed Shares
have been sold, to be paid to them upon surrender of the Old Certificates. From
and after any such sale, the sole right of the holders of the unsurrendered Old
Certificates whose Unclaimed Shares have been sold shall be the right to collect
the net sale proceeds held by NBTB for their respective accounts, and such
holders shall not be entitled to receive any interest on such net sale proceeds
held by NBTB.
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<PAGE>
(e) If any Old Certificates are not surrendered prior to the date on
which such certificates or the proceeds of the sale of the Unclaimed Shares, as
the case may be, would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by abandoned property and any other applicable law, become the property of NBTB
(and to the extent not in its possession shall be paid over to it), free and
clear of all claims or interest of any person previously entitled to such
claims. Notwithstanding the foregoing, neither NBTB nor its agents or any other
person shall be liable to any former holder of PAHC Common Stock for any
property delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
1.9. NOTICE OF EXCHANGE. Promptly after the Effective Time, AST shall mail
to each holder of one or more certificates formerly representing PAHC Common
Stock a notice specifying the Effective Time and notifying such holder to
surrender his, her or its certificate or certificates to AST for exchange. Such
notice shall be mailed to holders by regular mail at their addresses on the
records of PAHC.
1.10. ACTS TO CARRY OUT THIS MERGER PLAN.
(a) PAHC and its proper officers and directors shall do all such acts
and things as may be necessary or proper to vest, perfect, or confirm in NBTB
title to such property or rights as are specified in sections 1.4(c) and 1.4(d)
of this Agreement and otherwise to carry out the purposes of this Agreement.
(b) If, at any time after the Effective Time, NBTB shall consider or be
advised that any further assignments or assurances in law or any other acts are
necessary or desirable to (i) vest, perfect, or confirm, of record or otherwise,
in NBTB its right, title, or interest in or under any of the rights, properties,
or assets of PAHC acquired or to be acquired by NBTB as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, PAHC and its proper officers and directors shall be deemed to have
granted to NBTB an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments, and assurances in law and to do all acts necessary or
proper to vest, perfect, or confirm title to and possession of such rights,
properties, or assets in NBTB and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of NBTB are fully authorized in
the name of PAHC or otherwise to take any and all such action.
1.11. TREATMENT OF STOCK OPTIONS. At the Effective Time, each stock option
to purchase PAHC Common Stock not exercised prior to the Effective Time (each, a
"Converted Option"), whether vested or unvested, shall automatically be
converted into an option (a "Replacement Option") to acquire, on the same terms
and conditions as were applicable under the terms of such Converted Option and
any option plan under which such Converted Option was issued (or as near thereto
as is practicable), a number of shares of NBTB Common Stock equal to (rounded
down to the nearest whole number of shares) (a) the number of shares of PAHC
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Common Stock subject to such Converted Option as of the Effective Time
multiplied by (b) the Exchange Ratio, at an exercise price per share (rounded
down to the nearest whole cent) equal to (x) the aggregate exercise price under
such Converted Option for all of the shares of PAHC Common Stock subject to such
Converted Option at the Effective Time divided by (y) the number of shares of
NBTB Common Stock subject to such Replacement Option. Notwithstanding the
foregoing, in the case of each Converted Option to which section 421 of the Code
applies by reason of its qualification under section 422 of the Code, the terms
of the Replacement Option into which such Converted Option is converted,
including the option price, the number of shares of NBTB Common Stock
purchasable pursuant to such option, and the terms and conditions of exercise of
such option shall be determined so as to comply with section 424(a) of the Code.
At or prior to the Effective Time, PAHC shall take all action, if any, necessary
with respect to any Converted Options or stock plans under which Converted
Options have been issued to permit the replacement of the Converted Options with
Replacement Options as contemplated by this section 1.11. At the Effective Time,
NBTB shall assume such stock plans; provided, that such assumption shall only be
in respect of the Replacement Options and that NBTB shall have no obligation
with respect to any awards under such plans other than the Replacement Options
and shall have no obligation to make any additional grants or awards under such
assumed plans.
1.12. STOCK OPTION AGREEMENT. Simultaneously herewith, NBTB and PAHC shall
execute and deliver the Stock Option Agreement in the form attached hereto as
Exhibit I. The option that is the subject of the Stock Option Agreement will
terminate as of, and will not be exercisable following, the Effective Time.
1.13. EXECUTIVE OFFICERS AND DIRECTORS OF PAHC.
(a) At the Effective Time, in consideration for and against delivery of
a full and unconditional release granted in favor of NBTB, PAHC, and Pioneer
American Bank, National Association ("PA Bank") by John W. Reuther ("Reuther")
from any and all claims, actions, or liabilities which Reuther may have, may
have had, or could have against NBTB, PAHC, or PA Bank (except entitlements
granted to Reuther by this Agreement or the employment agreement described in
section 4.8 hereof (the "Reuther Employment Agreement") or granted to Reuther by
the Executive Retirement Plan of PA Bank adopted on October 25, 1988 or the
Split Dollar Agreement/Key Executive Equity Program dated February 15, 1994, as
restated April 16, 1999), and subject in every case to section 18(k) of the
Federal Deposit Insurance Act (12 U.S.C. ss. 1828(k)), NBTB will tender to
Reuther the Reuther Employment Agreement and the change-in-control agreement
described in section 5.5 hereof.
(b) At the Effective Time, in consideration for and against delivery of
a full and unconditional release granted in favor of NBTB, PAHC, and PA Bank by
Patricia A. Cobb ("Cobb") from any and all claims, actions, or liabilities which
Cobb may have, may have had, or could have against NBTB, PAHC, or PA Bank
(except entitlements granted to Cobb by this Agreement), and subject in every
case to section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. ss.
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1828(k)), NBTB will tender to Cobb the change-in-control agreement described in
section 5.5 hereof.
(c) At the Effective Time, in consideration for and against delivery of
a full and unconditional release granted in favor of NBTB, PAHC, and PA Bank by
James E. Jackson ("Jackson") from any and all claims, actions, or liabilities
which Jackson may have, may have had, or could have against NBTB, PAHC, or PA
Bank (except entitlements granted to Jackson by this Agreement), and subject in
every case to section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. ss.
1828(k)), NBTB will tender to Jackson the change-in-control agreement described
in section 5.5 hereof.
(d) Subject to the fiduciary duties of its directors to NBTB, NBTB will
cause Joseph G. Nasser ("Nasser"), Gene E. Goldenziel ("Goldenziel"), and
Richard Chojnowski ("Chojnowski") to be elected or appointed as directors of
NBTB with terms commencing at the Effective Time, with Nasser to serve as a
director of the class whose term expires in 2000, Goldenziel to serve as a
director of the class whose term expires in 2001, and Chojnowski to serve as a
director of the class whose term expires in 2002.
(e) If the Merger has occurred prior to the date of mailing of the
proxy materials to NBTB stockholders in connection with the 2000 annual meeting
of the stockholders of NBTB, NBTB will propose to its stockholders in those
proxy materials that Nasser be reelected to the board of directors of NBTB as a
member of the class whose term shall expire in 2003.
1.14. EMPLOYEE BENEFITS.
(a) If any employee of PAHC or of PA Bank becomes a participant in any
employment benefit plan, practice, or policy of NBTB or NBT Bank, National
Association ("NBT Bank"), such employee shall be given credit under such plan,
practice, or policy for all service prior to the Effective Time with PAHC or PA
Bank for purposes of eligibility and vesting, but not for benefit accrual
purposes, for which such service is taken into account or recognized, and, if
necessary, NBTB shall cause any and all pre-existing condition limitations and
eligibility waiting periods under group health plans to be waived with respect
to such participants and their eligible dependents (except to the extent such
pre-existing condition limitations are no more onerous than similar limitations,
or such waiting periods do not extend any waiting period, applicable to such
employee under the plans of PAHC or PA Bank), provided that there be no
duplication of such benefits as are provided under any employee benefit plans,
practices, or policies of PAHC or PA Bank that continue in effect following the
Effective Time.
(b) Each employee of PAHC or PA Bank (except Reuther, Cobb, and
Jackson) who becomes an employee of NBTB or any of its subsidiaries or who,
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following the Effective Time, remains an employee of PA Bank and is terminated
by NBTB or any of its subsidiaries (including PA Bank) subsequent to the
Effective Time shall be entitled to severance pay, if any, in accordance with
the general severance policy of NBTB. Such employee's service with PAHC or PA
Bank shall be treated as service with NBTB for purposes of determining the
amount of severance pay, if any, under the severance policy of NBTB.
1.15. VOTING AGREEMENTS. Simultaneously herewith, each shareholder of PAHC
who is listed on Schedule 1.15 attached hereto shall each enter into an
agreement with NBTB, substantially in form and substance as that set forth as
Exhibit II attached hereto, in which he or she agrees to vote all shares of PAHC
Common Stock which may be voted, or whose vote may be directed, by him or her,
in favor of the transactions contemplated by this Agreement at the meeting of
shareholders at which such transactions shall be considered.
1.16. OPTIONAL BANK MERGER TRANSACTION. NBTB in its sole and absolute
discretion may elect to cause a merger of PA Bank to be consummated in
accordance with the following terms and conditions:
(a) At any time following the date of this Agreement, and until and
including February 5, 2000, NBTB shall be entitled to give notice to PAHC that
NBTB wishes on the date of the Effective Time, and at such time subsequent to
the Effective Time on such date as shall be designated by NBTB, to consummate
the merger of PA Bank with and into LA Bank, National Association ("LA Bank"),
or the merger of LA Bank into PA Bank, as the case may be specified in such
notice (in either case, the "Bank Merger"). The day on which NBTB gives any such
notice is referred to herein as the "Bank Merger Notice Date."
(b) Following the Bank Merger Notice Date, NBTB shall use commercially
reasonable efforts to cause LA Bank to promptly enter into, and PAHC shall cause
PA Bank to promptly enter into, an agreement of merger substantially in form and
substance as that set forth as Exhibit III attached hereto.
(c) Following the Bank Merger Notice Date and at the request of NBTB,
PAHC shall cause PA Bank to promptly become a party to this Agreement and to
join in such representations, warranties, covenants, and agreements to or with
NBTB as PAHC has, with respect to PA Bank, made to or with NBTB in this
Agreement.
(d) Following the Bank Merger Notice Date, NBTB shall use commercially
reasonable efforts to cause LA Bank to promptly seek to obtain the approval of
the Office of the Comptroller of the Currency (the "OCC") and such other
approvals, if any, as LA Bank may require for the consummation of the Bank
Merger, and PAHC shall cause PA Bank to promptly seek to obtain such approvals,
if any, as PA Bank may require for the consummation of the Bank Merger.
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(e) Anything in this Agreement to the contrary notwithstanding, the
Bank Merger shall not occur unless, at the time of the Bank Merger, LA Bank is a
direct or indirect subsidiary of NBTB.
2. EFFECTIVE TIME.
The Effective Time shall be the date and time specified in the articles of
merger to be filed with the Secretary of State of the Commonwealth of
Pennsylvania pursuant to section 1927 of the BCL to effectuate the First Merger,
the date of which shall be the latest of:
2.1. PAHC SHAREHOLDER APPROVAL. The day upon which the shareholders of
PAHC approve, ratify, and confirm the Merger by the affirmative vote of the
holders of at least 70 percent of the votes which all shareholders of PAHC are
entitled to cast thereon;
2.2. NBTB SHAREHOLDER APPROVAL. The day upon which the shareholders of
NBTB approve the issuance of NBTB Common Stock pursuant to this Agreement and
ratify this Agreement;
2.3. FEDERAL RESERVE APPROVAL. The first to occur of (a) the date thirty
days following the date of the order of the Board of Governors of the Federal
Reserve System or the Federal Reserve Bank of New York acting pursuant to
authority delegated to it by the Board of Governors of the Federal Reserve
System (collectively, the "Board of Governors") approving the Merger, or (b) if,
pursuant to section 321(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (the "Riegle Act"), the Board of Governors shall have
prescribed a shorter period of time with the concurrence of the Attorney General
of the United States, the date on which such shorter period of time shall
elapse, or (c) the date ten days following the date on which the Board of
Governors indicates its waiver of jurisdiction over the Merger; or
2.4. OCC APPROVAL. If the Bank Merger Notice Date shall have timely
occurred, the first to occur of (a) the date thirty days following the date of
the order of the OCC approving the Bank Merger, or (b) if, pursuant to section
321(b) of the Riegle Act, the OCC shall have prescribed a shorter period of time
with the concurrence of the Attorney General of the United States, the date on
which such shorter period of time shall elapse; or
2.5. PENNSYLVANIA DEPARTMENT OF BANKING APPROVAL. The date ten days
following the date of the order of the Department of Banking of the Commonwealth
of Pennsylvania (the "Department") approving the transactions contemplated by
this Agreement;
2.6. OTHER REGULATORY APPROVALS. The date upon which any other material
order, approval, or consent of a federal or state regulator of financial
institutions or financial institution holding companies authorizing consummation
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of the transactions contemplated by this Agreement is obtained or any waiting
period mandated by such order, approval, or consent has run;
2.7. EXPIRATION OF STAYS. Ten days after any stay of the approvals of any
of the Board of Governors or the Department of the transactions contemplated by
this Agreement or any injunction against closing of said transactions is lifted,
discharged, or
dismissed; or
2.8. MUTUAL AGREEMENT. Such other date as shall be mutually agreed to by
NBTB and PAHC.
3. CONDITIONS PRECEDENT TO PERFORMANCE OF OBLIGATIONS OF THE PARTIES.
The obligations of NBTB and PAHC to consummate the Merger shall be subject
to the conditions that on or before the Effective Time:
3.1. REGULATORY APPROVALS. Orders, consents, and approvals required to
consummate the Merger and, if the Bank Merger Notice Date shall have timely
occurred, the Bank Merger shall have been entered by the requisite governmental
authorities, and all statutory waiting periods in respect thereof shall have
expired.
3.2. REGISTRATION STATEMENT.
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(a) EFFECTIVENESS. The registration statement to be filed by NBTB with
the Securities and Exchange Commission (the "SEC") pursuant to the Securities
Act in connection with the registration of the shares of NBTB Common Stock to be
used as consideration in connection with the Merger (the "Registration
Statement") shall have become effective under the Securities Act, and NBTB shall
have received all required state securities laws or "blue sky" permits and other
required authorizations or confirmations of the availability of exemptions from
registration requirements necessary to issue NBTB Common Stock in the Merger.
(b) ABSENCE OF STOP-ORDER. Neither the Registration Statement nor any
such required permit, authorization, or confirmation shall be subject to a
stop-order or threatened stop-order by the SEC or any state securities
authority.
3.3. APPROVAL BY SHAREHOLDERS OF PAHC. The shareholders of PAHC shall have
authorized, ratified, and confirmed the Merger by the affirmative vote of the
holders of at least 70 percent of the votes which all shareholders of PAHC are
entitled to cast thereon.
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3.4. APPROVAL BY SHAREHOLDERS OF NBTB.
--------------------------------
(a) The shareholders of NBTB shall have approved the issuance of NBTB
Common Stock pursuant to this Agreement and ratified this Agreement.
(b) The shareholders of NBTB shall have approved a proposed amendment
to NBTB's Certificate of Incorporation to increase the number of authorized
shares of NBTB common stock from fifteen million to thirty million (the "Share
Increase Amendment").
3.5. FEDERAL INCOME TAXATION. NBTB and PAHC shall have received a written
opinion of Blank Rome Comisky & McCauley LLP, or of Duane, Morris & Heckscher
LLP, or of another firm mutually agreeable to NBTB and PAHC, applying existing
law, that the Merger shall qualify as one or more reorganizations under section
368(a)(1) of the Code and the regulations and rulings promulgated thereunder. In
rendering such opinion, the firm rendering the opinion may require and rely upon
representations contained in certificates of officers of NBTB, PAHC, and others.
3.6. ADVERSE LEGISLATION. Subsequent to the date of this Agreement, no
legislation shall have been enacted and no regulation or other governmental
requirement shall have been adopted or imposed that renders or will render
consummation of the Merger impossible or illegal.
3.7. ABSENCE OF LITIGATION. No action, suit, or proceeding shall have been
instituted or shall have been threatened before any court or other governmental
body or by any public authority to restrain, enjoin, or prohibit the Merger, or
which would reasonably be expected to restrict materially the operation of the
business of NBTB, that of PAHC, or that of PA Bank or the exercise of any rights
with respect thereto or to subject either of the parties hereto or any of their
subsidiaries, directors, or officers to any liability, fine, forfeiture,
divestiture, or penalty on the ground that the transactions contemplated hereby,
the parties hereto, or their subsidiaries, directors, or officers have breached
or will breach any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby and with
respect to which the parties hereto have been advised by counsel that, in the
opinion of such counsel, such action, suit, or proceeding raises substantial
questions of law or fact which could reasonably be decided materially adversely
to either party hereto or its subsidiaries, directors, or officers.
4. CONDITIONS PRECEDENT TO PERFORMANCE OF THE OBLIGATIONS OF NBTB.
The obligations of NBTB hereunder are subject to the satisfaction, on or
prior to the Effective Time, of all the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by NBTB in
writing unless not so permitted by law:
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4.1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of PAHC contained in this Agreement shall be true
and correct in all material respects as of the Effective Time with the same
effect as if such representations and warranties had been made or given at and
as of such date, except that representations and warranties of PAHC contained in
this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by PAHC on or prior to the Effective Time
shall have been so performed or met. On the date of the Effective Time, the
president and chief executive officer and the chief financial officer of PAHC
shall deliver to NBTB a certificate to that effect. The delivery of such
certificates shall in no way diminish the warranties, representations,
covenants, and obligations of PAHC made in this Agreement.
4.2. OPINION OF PAHC COUNSEL. NBTB shall have received (a) a favorable
opinion from Blank Rome Comisky & McCauley LLP, dated the date of the Effective
Time, substantially in form and substance as that set forth as Exhibit IV(a)
attached hereto, and (b) a favorable opinion from Patricia A. Cobb, Esq., Senior
Executive Vice President/In-House Counsel of PAHC, dated the date of the
Effective Time, substantially in form and substance as that set forth in Exhibit
IV(b) attached hereto.
4.3. OPINION OF PAHC LITIGATION COUNSEL. NBTB shall have received a
favorable opinion from legal counsel handling litigation matters for PAHC and PA
Bank, dated the date of the Effective Time, substantially in form and substance
as that set forth as Exhibit V attached hereto.
4.4. NO ADVERSE DEVELOPMENTS.
(a) During the period from September 30, 1999 to the Effective Time,
(i) there shall not have been any material adverse effect as defined in section
12.7(d) (a "Material Adverse Effect") with respect to PAHC; and (ii) none of the
events described in clauses (a) through (f) of section 6.16 of this Agreement
shall have occurred, and each of the practices and conditions described in
clauses (x) through (z) of that section shall have been maintained.
(b) As of the Effective Time, the capital structure of PAHC and the
capital structure of PA Bank shall be as stated in section 6.9.
(c) As of the Effective Time, other than liabilities incurred in the
ordinary course of business subsequent to September 30, 1999, there shall be no
liabilities of PAHC or PA Bank which are material to PAHC on a consolidated
basis which were not reflected on the consolidated statement of condition of
PAHC as of September 30, 1999 or in the related notes to the consolidated
statement of condition of PAHC as of September 30, 1999.
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(d) No adverse action shall have been instituted or threatened against
PAHC or any of its subsidiaries by any governmental authority, or referred by a
governmental authority to another governmental authority, for the enforcement or
assessment of penalties for the violation of any laws of regulations relating to
equal credit opportunity, fair housing, or fair lending.
(e) NBTB shall have received a certificate dated the date of the
Effective Time, signed by the president and the chief financial officer of PAHC,
certifying to the matters set forth in paragraphs (a), (b), (c), and (d) of this
section 4.4. The delivery of such officers' certificate shall in no way diminish
the warranties and representations of PAHC made in this Agreement.
4.5. CONSOLIDATED NET WORTH. On and as of the Effective Time, the
consolidated net worth of PAHC as determined in accordance with generally
accepted accounting principles but without regard to the change in unrealized
gains and losses on securities (net of reclassification adjustment and tax
effects) between September 30, 1999 and the Effective Time, shall not be less
than the sum of (a) $31,906,000, (b) the proceeds to PAHC of the sale of
treasury stock since September 30, 1999, and (c) the proceeds to PAHC of the
exercise of stock options to purchase shares of PAHC Common Stock since
September 30, 1999.
4.6. LOAN LOSS RESERVE. On and as of the Effective Time, the aggregate
reserve for loan losses of PA Bank as determined in accordance with generally
accepted accounting principles shall not be less than $3,000,000.
4.7. CRA RATING. The CRA rating of PA Bank shall be no lower than
"satisfactory."
4.8. EMPLOYMENT AGREEMENT. Reuther shall have entered into an employment
agreement with NBTB substantially in form and substance as that set forth as
Exhibit VI attached hereto.
4.9. RELEASES. The releases described in sections 1.13(a), (b), and (c)
shall have been delivered to NBTB.
4.10. ACCOUNTING TREATMENT. NBTB shall have received letters (the "Pooling
Letters") from KPMG LLP ("KPMG"), in its capacity as the independent auditing
firm of NBTB, dated the date of or shortly prior to each of the mailing date of
the proxy materials to the shareholders of PAHC, and the date of the Effective
Time, stating the opinion of KPMG that the Merger shall qualify for
pooling-of-interest accounting treatment.
4.11. AFFILIATES' AGREEMENTS. NBTB shall have received a written
agreement substantially in form and substance as that set forth as Exhibit VII
attached hereto (an "Affiliates Agreement"):
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(a) on or before the date of this Agreement, from each person who, on
the date of this Agreement, is an "affiliate" of PAHC (as that term is used in
section 7.6 of this Agreement), and
(b) not later than ten days after any other person becomes an
"affiliate" of PAHC (as that term is used in section 7.6 of this Agreement),
from such person.
4.12. FAIRNESS OPINION. NBTB shall have received a letter from McConnell,
Budd & Downes, Inc. ("MB&D"), dated the date of or shortly prior to the mailing
date of the proxy materials to the shareholders of NBTB, stating the opinion of
MB&D that the Exchange Ratio is fair, from a financial point of view, to the
shareholders of NBTB.
5. CONDITIONS PRECEDENT TO PERFORMANCE OF OBLIGATIONS OF PAHC.
The obligations of PAHC hereunder are subject to the satisfaction, on or
prior to the Effective Time, of all the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by PAHC in
writing unless not so permitted by law:
5.1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of NBTB contained in this Agreement shall be true
and correct in all material respects as of the Effective Time with the same
effect as if such representations and warranties had been made or given at and
as of such date, except that representations and warranties of NBTB contained in
this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by NBTB on or prior to the Effective Time
shall have been so performed or met. On the date of the Effective Time, either
the president or an executive vice president of NBTB shall deliver to PAHC a
certificate to that effect. The delivery of such officer's certificate shall in
no way diminish the warranties, representations, covenants, and obligations of
NBTB made in this Agreement.
5.2. OPINION OF NBTB COUNSEL. PAHC shall have received a favorable opinion
of Duane, Morris & Heckscher LLP, dated the date of the Effective Time,
substantially in form and substance as that set forth as Exhibit VIII attached
hereto.
5.3. NO ADVERSE DEVELOPMENTS. During the period from September 30, 1999 to
the Effective Time, there shall not have been any Material Adverse Effect with
respect to NBTB, and PAHC shall have received a certificate dated the date of
the Effective Time signed by either the President or an Executive Vice President
of NBTB to the foregoing effect. The delivery of such officer's certificate
shall in no way diminish the warranties and representations of NBTB made in this
Agreement.
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5.4. STATUS OF NBTB COMMON STOCK. The shares of NBTB Common Stock to be
issued to the shareholders of PAHC upon consummation of the Merger shall have
been authorized for inclusion on the Nasdaq National Market (or another national
securities exchange) subject to official notice of issuance.
5.5. CHANGE-IN-CONTROL AGREEMENTS. NBTB shall have tendered to each of
Reuther, Cobb, and Jackson a change-in-control agreement substantially in form
and substance as that set forth as Exhibit IX attached hereto.
5.6. BOARD OF DIRECTORS. Subject to the fiduciary duties of its directors
to NBTB, NBTB shall have taken all necessary action to comply with its
obligations under section 1.13(d) of this Agreement.
5.7. FAIRNESS OPINION. PAHC shall have received a letter from Danielson
Associates Inc. ("Danielson"), dated the date of or shortly prior to the mailing
date of the proxy materials to the shareholders of PAHC, stating the opinion of
Danielson that the Exchange Ratio is fair, from a financial point of view, to
the shareholders of PAHC.
5.8. ACCOUNTING TREATMENT. NBTB shall have received the Pooling Letters,
provided, however, that if NBTB shall not have received the Pooling Letters as a
result of the action of PAHC or one or more of its affiliates, directors,
officers, or shareholders, then PAHC shall be deemed to have duly waived the
condition set forth in this section 5.8.
6. REPRESENTATIONS AND WARRANTIES OF PAHC.
PAHC represents and warrants to NBTB as follows:
6.1. ORGANIZATION, POWERS, AND QUALIFICATION. Each of PAHC and PA Bank is a
corporation which is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own and operate its properties and assets, to
lease properties used in its business, and to carry on its business as now
conducted. Each of PAHC and PA Bank owns or possesses in the operation of its
business all franchises, licenses, permits, branch certificates, consents,
approvals, waivers, and other authorizations, governmental or otherwise, which
are necessary for it to conduct its business as now conducted, except for those
where the failure of such ownership or possession would not have a Material
Adverse Effect on PAHC or PA Bank. Each of PAHC and PA Bank is duly qualified
and licensed to do business and is in good standing in every jurisdiction with
respect to which the failure to be so qualified or licensed could result in a
Material Adverse Effect on PAHC or PA Bank.
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6.2. EXECUTION AND PERFORMANCE OF AGREEMENT. Subject to the approval of
this Agreement by the affirmative vote of the holders of at least 70 percent of
the votes which all shareholders of PAHC are entitled to cast thereon, PAHC has
all requisite corporate power and authority to execute and deliver this
Agreement and to perform its respective terms.
6.3. ABSENCE OF VIOLATIONS.
(a) Neither PAHC nor PA Bank is (i) in violation of its respective
charter documents or bylaws, (ii) in violation of any applicable federal, state,
or local law or ordinance or any order, rule, or regulation of any federal,
state, local, or other governmental agency or body, or (iii) in violation of or
in default with respect to any order, writ, injunction, or decree of any court,
or any order, license, regulation, or demand of any governmental agency, except,
in the case of (ii) or (iii), for such violations or defaults which in the
aggregate could not reasonably be expected to have a Material Adverse Effect on
PAHC or PA Bank; and neither PAHC nor PA Bank has received any claim or notice
of violation with respect thereto;
(b) neither PAHC nor PA Bank nor any member of the management of either
of them is a party to any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any regulatory order or decree with or by the Board of Governors, the Federal
Reserve Bank of Philadelphia, the OCC, the Federal Deposit Insurance Corporation
(the "FDIC"), the SEC, the Department, any other banking or securities authority
of the United States or the Commonwealth of Pennsylvania, or any other
regulatory agency that relates to the conduct of the business of PAHC or PA Bank
or any of their subsidiaries or their assets; and except as previously disclosed
to NBTB in writing, no such agreement, memorandum, order, condition, or decree
is pending or threatened;
(c) PA Bank has established policies and procedures to provide
reasonable assurance of compliance in a safe and sound manner with the federal
banking, credit, housing, consumer protection, and civil rights laws and the
regulations adopted under each of those laws, so that transactions be executed
and assets be maintained in accordance with such laws and regulations; and the
policies and practices of PA Bank with respect to all such laws and regulations
reasonably limit noncompliance and detect and report noncompliance to its
management; and
(d) PA Bank has established a CRA policy which provides for goals and
objectives consistent with CRA and for procedures whereby all significant
CRA-related activity is documented; and PA Bank has officially designated a CRA
officer who reports directly to the board of directors and is responsible for
the CRA program of PA Bank.
6.4. COMPLIANCE WITH AGREEMENTS. Neither PAHC nor PA Bank is in violation
of any term of any security agreement, mortgage, indenture, or any other
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contract, agreement, instrument, lease, or certificate, except for such
violations which in the aggregate could not reasonably be expected to have a
Material Adverse Effect on PAHC or PA Bank.
6.5. BINDING OBLIGATIONS. Subject to the approval of its shareholders, this
Agreement constitutes valid, legal, and binding obligations of PAHC, enforceable
against it in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar law, or by general
principles of equity. The execution, delivery, and performance of this Agreement
and the transactions contemplated thereby have been duly and validly authorized
by the board of directors of PAHC.
6.6. ABSENCE OF DEFAULT; DUE AUTHORIZATION.
(a) None of the execution or the delivery of this Agreement, the
consummation of the transactions contemplated thereby, or the compliance with or
fulfillment of the terms thereof will conflict with, or result in a breach of
any of the terms, conditions, or provisions of, or constitute a default under
the organizational documents or bylaws of PAHC or PA Bank or any subsidiary of
either of them. Such execution, consummation, and fulfillment will not (i)
conflict with, or result in a breach of the terms, conditions, or provisions of,
or constitute a violation, conflict, or default under, or, except as set forth
on Schedule 6.6 hereof, give rise to any right of termination, cancellation, or
acceleration with respect to, or result in the creation of any lien, charge, or
encumbrance upon, any property or assets of PAHC or PA Bank or any subsidiary of
either of them pursuant to any agreement or instrument under which PAHC or PA
Bank or any such subsidiary is obligated or by which any of its properties or
assets may be bound, including without limitation any lease, contract, mortgage,
promissory note, deed of trust, loan, credit arrangement, or other commitment or
arrangement of PAHC or PA Bank or any subsidiary of either of them in respect of
which it is an obligor, except for such conflicts, breaches, violations,
defaults, rights of termination, cancellation, or acceleration, or results which
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on PAHC or PA Bank; (ii) if the Merger is approved by the Board of
Governors under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"), or if the Board of Governors waives its jurisdiction over the Holding
Company Merger, and if the Bank Merger is approved by the OCC, and if the
transactions contemplated by this Agreement are approved by the Department,
violate any law, statute, rule, or regulation of any government or agency to
which PAHC or PA Bank or any subsidiary of either of them is subject and which
is material to its operations; or (iii) violate any judgment, order, writ,
injunction, decree, or ruling to which PAHC or PA Bank or any subsidiary of
either of them or any of the properties or assets of either of them is subject
or bound. None of the execution or delivery of this Agreement, the consummation
of the transactions contemplated hereby, or the compliance with or fulfillment
of the terms hereof will require any authorization, consent, approval, or
exemption by any person which has not been obtained, or any notice or filing
which has not been given or done, other than approval of the transactions
contemplated by this Agreement by, notices to, or filings with by the Board of
Governors, the OCC, the Securities and Exchange Commission (the "SEC"), state
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securities commissions, the Department, the Secretary of State of the State of
Delaware, and the Secretary of State of the Commonwealth of Pennsylvania.
(b) Except for approval of this Agreement by the affirmative vote of
the holders of at least 70 percent of the votes which all shareholders of PAHC
are entitled to cast thereon, and except for approval of the Bank Merger by the
board of directors and shareholders of PA Bank, no other corporate proceedings
on the part of PAHC are necessary to approve or authorize this Agreement, the
Merger, the Stock Option Agreement, the issuance of the stock options
contemplated by the Stock Option Agreement, the subsequent exercise of the stock
options thereby issued, the Bank Merger, or the other transactions contemplated
by this Agreement and the Stock Option Agreement or the carrying out of the
transactions contemplated hereby or thereby.
(c) The Board of Directors of PAHC has taken all necessary action under
the articles of incorporation of PAHC to approve unconditionally and irrevocably
the right of NBTB and any transferee of NBTB and the right of any "person" that
includes either NBTB or any such transferee (i) to cast more than 10 percent of
the total votes entitled to be cast by all holders of the voting securities of
PAHC at any meeting, and (ii) to have "holdings" (as defined in the articles of
incorporation of PAHC) that exceed 10 percent of the voting securities of PAHC,
whether such votes or holdings are acquired by NBTB in the First Merger, by the
issuance of the stock options contemplated by the Stock Option Agreement, by the
subsequent exercise of the stock options issued thereby, or otherwise.
(d) The Board of Directors of PAHC has taken all necessary action so
that the provisions of sections 2561 et seq. of the BCL (and any applicable
provisions of the takeover laws of any other state) and any comparable
provisions of PAHC's articles of incorporation do not and will not apply to this
Agreement, the First Merger, the Second Merger, the Stock Option Agreement, or
the transactions contemplated hereby.
(e) PAHC has not adopted any shareholder rights plan, "poison pill" or
similar plan, or any other plan which could result in the grant of any rights to
any person, or which could enable or require any rights to be exercised,
distributed or triggered, in the event of the execution, delivery, or
announcement of this Agreement or the Stock Option Agreement, or in the event of
the consummation of the Merger or the Bank Merger or any of the transactions
contemplated by this Agreement or the Stock Option Agreement.
6.7. COMPLIANCE WITH BHC ACT; CERTAIN BANKING REGULATORY MATTERS.
(a) PAHC is duly registered as a bank holding company under the BHC
Act. All of the activities and investments of PAHC conform to the requirements
applicable generally to bank holding companies under the BHC Act and the
regulations of the Board of Governors adopted thereunder.
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(b) No corporation or other entity, other than PAHC, is registered or
is required to be registered as a bank holding company under the BHC Act by
virtue of its control over PA Bank or over any company that directly or
indirectly has control over PA Bank.
(c) Each of the activities engaged in by PAHC and its direct and
indirect subsidiaries has been determined by regulation of the Board of
Governors to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.
(d) The capital ratios of each of PAHC and PA Bank comply fully with
all terms of all currently outstanding supervisory and regulatory requirements
and with the conditions of all regulatory orders and decrees.
6.8. SUBSIDIARIES.
(a) Other than PA Bank, which is a direct, wholly-owned subsidiary of
PAHC, PAHC does not have any direct or indirect subsidiaries and does not
directly or indirectly own, control, or hold with the power to vote any shares
of the capital stock of any company (except shares held by PA Bank for the
account of others in a fiduciary or custodial capacity in the ordinary course of
its business and shares of the Federal Reserve Bank of Philadelphia and the
Federal Home Loan Bank of Pittsburgh). There are no outstanding subscriptions,
options, warrants, convertible securities, calls, commitments, or agreements
calling for or requiring the issuance, transfer, sale, or other disposition of
any shares of the capital stock of PA Bank, or calling for or requiring the
issuance of any securities or rights convertible into or exchangeable for shares
of capital stock of PA Bank. There are no other direct or indirect subsidiaries
of PAHC which are required to be consolidated or accounted for on the equity
method in the consolidated financial statements of PAHC or the financial
statements of PA Bank prepared in accordance with generally accepted accounting
principles.
(b) Except as specified in the previous subsection, neither PAHC nor PA
Bank has a direct or indirect equity or ownership interest which represents 5
percent or more of the aggregate equity or ownership interest of any entity
(including, without limitation, corporations, partnerships, and joint ventures).
6.9. CAPITAL STRUCTURE.
(a) The authorized capital stock of PAHC consists of 1,000,000 shares
of PAHC Preferred Stock, $10.00 par value, none of which have been issued as of
the date of this Agreement, and 25,000,000 shares of PAHC Common Stock, of
which, as of the date of this Agreement, 2,864,307 shares have been duly issued
and are validly outstanding, fully paid, and nonassessable, and held by
approximately 1,460 shareholders of record, and an additional 71,600 shares are
held in the treasury of PAHC. The aforementioned shares of PAHC Common Stock are
the only voting securities of PAHC authorized, issued, or outstanding as of such
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date; and except as set forth on Schedule 6.9 hereof, there are no outstanding
subscriptions, options, warrants, convertible securities, calls, commitments, or
agreements calling for or requiring the issuance, transfer, sale, or other
disposition of any shares of the capital stock of PAHC, or calling for or
requiring the issuance of any securities or rights convertible into or
exchangeable for shares of capital stock of PAHC. None of the PAHC Common Stock
is subject to any restrictions upon the transfer thereof under the terms of the
articles of incorporation or bylaws of PAHC.
(b) Schedule 6.9 hereof lists all options to purchase PAHC securities
currently outstanding and, for each such option, the date of issuance, date of
exercisability, exercise price, type of security for which exercisable, and date
of expiration. Schedule 6.9 hereof further lists all shares of PAHC Common Stock
reserved for issuance pursuant to stock option plans, agreements, or
arrangements but not yet issued and all options upon shares of PAHC Common Stock
designated or made available for grant but not yet granted.
(c) The authorized capital stock of PA Bank consists of 325,000 shares
of common stock, $10.00 par value (the "PA Bank Common Stock"), of which, as of
the date of this Agreement, 267,748 shares have been duly issued and are validly
outstanding, fully paid, and nonassessable, and all of which are held of record
and beneficially by PAHC directly, free and clear of any adverse claims. The
aforementioned shares of PA Bank Common Stock are the only voting securities of
PA Bank authorized, issued, or outstanding as of such date. None of the PA Bank
Common Stock is subject to any restrictions upon the transfer thereof under the
terms of the corporate charter or bylaws of PA Bank or under the terms of any
agreement to which PA Bank is a party or under which it is bound.
(d) None of the shares of PAHC Common Stock or PA Bank Common Stock has
been issued in violation of the preemptive rights of any shareholder.
(e) As of the date hereof, to the best of the knowledge of PAHC, and
except for this Agreement, there are no shareholder agreements, or other
agreements, understandings, or commitments relating to the right of any holder
or beneficial owner of more than 1 percent of the issued and outstanding shares
of any class of the capital stock of either PAHC or PA Bank to vote or to
dispose of his, her or its shares of capital stock of that entity.
6.10. ARTICLES OF INCORPORATION, BYLAWS, AND MINUTE BOOKS. The copies of
the articles of incorporation or association and all amendments thereto and of
the bylaws, as amended, of PAHC and PA Bank that have been provided to NBTB are
true, correct, and complete copies thereof. The minute books of PAHC and PA Bank
that have been made available to NBTB contain accurate minutes of all meetings
and accurate consents in lieu of meetings of the board of directors (and any
committee thereof) and of the shareholders of PAHC and PA Bank since their
respective inceptions. These minute books accurately reflect all transactions
referred to in such minutes and consents in lieu of meetings and disclose all
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material corporate actions of the shareholders and boards of directors of PAHC
and PA Bank and all committees thereof. Except as reflected in such minute
books, there are no minutes of meetings or consents in lieu of meetings of the
board of directors (or any committee thereof) or of shareholders of PAHC or PA
Bank.
6.11. BOOKS AND RECORDS. The books and records of each of PAHC and PA Bank
fairly reflect the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly kept
and maintained and are in compliance in all material respects with all
applicable accounting and legal requirements. Each of PAHC and PA Bank follows
generally accepted accounting principles applied on a consistent basis in the
preparation and maintenance of its books of account and financial statements.
6.12. REGULATORY APPROVALS AND FILINGS, CONTRACTS, COMMITMENTS, ETC.
PAHC has made available to NBTB:
(a) All regulatory approvals received since January 1, 1992, of PAHC
and PA Bank relating to all bank and nonbank acquisitions or the establishment
of DE NOVO operations;
(b) All employment contracts, election contracts, retention contracts,
deferred compensation, non-competition, bonus, stock option, profit-sharing,
pension, retirement, consultation after retirement, incentive, insurance
arrangements or plans (including medical, disability, group life or other
insurance plans), and any other remuneration or fringe benefit arrangements
applicable to employees, officers, or directors of PAHC or PA Bank, accompanied
by any agreements, including trust agreements, embodying such contracts, plans,
or arrangements, and all employee manuals and memoranda relating to employment
and benefit policies and practices of any nature whatsoever (whether or not
distributed to employees or any of them), and any actuarial reports and audits
relating to such plans;
(c) All material contracts, agreements, leases, mortgages, and
commitments to which PAHC or PA Bank is a party or may be bound; or, if any of
the same be oral, true, accurate, and complete written summaries of all such
oral contracts, agreements, leases, mortgages, and commitments;
(d) All contracts, agreements, leases, mortgages, and commitments,
whether or not material, to which PAHC or PA Bank is a party or may be bound and
which require the consent or approval of third parties to the execution and
delivery of this Agreement or to the consummation or performance of any of the
transactions contemplated thereby or, if any of the same be oral, true,
accurate, and complete written summaries of all such oral contracts, agreements,
leases, mortgages, and commitments;
(e) All deeds, leases, contracts, agreements, mortgages, and
commitments, whether or not material, to which PAHC or PA Bank is a party or may
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be bound and which relate to land, buildings, fixtures, or other real property
upon or within which PAHC or PA Bank operates its businesses or is authorized to
operate its businesses, or with respect to which PAHC or PA Bank has any
application pending for authorization to operate its businesses;
(f) Any pending application, including any documents or materials
related thereto, which has been filed by PAHC or PA Bank with any federal or
state regulatory agency with respect to the establishment of a new office or the
acquisition or establishment of any additional banking or nonbanking subsidiary;
and
(g) All federal, state, and local tax returns, including any amended
returns, filed by PAHC or PA Bank for the years 1995 through 1998, a copy of the
calculation of the 1999 tax provision made by PAHC for the year 1999 as recorded
on its books and records, and a copy of all substantive correspondence or other
documents with respect to any examination that has not yet been resolved, a copy
of the most recent examination from each state or local tax agency if any, for
each of PAHC and PA Bank, and a copy of all substantive correspondence or other
documents with respect to any examination that has not yet been resolved, and
all tax rulings, closing agreements, settlement agreements, or similar documents
with respect to PAHC or PA Bank received from or entered into with the Internal
Revenue Service (the "IRS") or any other taxing authority since January 1, 1989
or that would have continuing effect after the Effective Time.
6.13. FINANCIAL STATEMENTS. PAHC has furnished to NBTB its consolidated
audited statement of condition as of each of December 31, 1996, December 31,
1997, and December 31, 1998, and its related audited consolidated statement of
income, consolidated statement of cash flows, and consolidated statement of
changes in stockholders' equity for each of the periods then ended, and the
notes thereto, and its consolidated unaudited statement of condition as of
September 30, 1999 and its related unaudited consolidated statement of income,
consolidated statement of cash flows, and consolidated statement of changes in
stockholders' equity for the period then ended, and the notes thereto, each as
filed with the SEC (collectively, the "PAHC Financial Statements"). All of the
PAHC Financial Statements, including the related notes, (a) except as indicated
in the notes thereto, were prepared in accordance with generally accepted
accounting principles consistently applied in all material respects (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), (b) are in accordance with the books and records of PAHC and
PA Bank, (c) fairly reflect the consolidated financial position of PAHC as of
such dates, and the consolidated results of operations of PAHC for the periods
ended on such dates, and do not fail to disclose any material extraordinary or
out-of-period items, and (d) reflect, in accordance with generally accepted
accounting principles consistently applied in all material respects, adequate
provision for, or reserves against, the consolidated loan losses of PAHC as of
such dates.
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6.14. CALL REPORTS; BANK HOLDING COMPANY REPORTS.
(a) PA Bank has made available to NBTB its FFIEC Consolidated Reports
of Condition and Income ("Call Reports") for the calendar quarter dated March
31, 1996 and each calendar quarter thereafter. All of such Call Reports,
including the related schedules and memorandum items, were prepared in
accordance with generally accepted accounting principles consistently applied in
all material respects or, to the extent different from generally accepted
accounting principles, accounting principles mandated by the applicable
instructions to such Call Reports.
(b) No adjustments are required to be made to the equity capital
account of PA Bank as reported on any of the Call Reports referred to in
Subsection 6.14(a) hereof, in any material amount, in order to conform such
equity capital account to equity capital as would be determined in accordance
with generally accepted accounting principles as of such date.
(c) PAHC has furnished to NBTB its annual report on Form FR Y-6 as
filed with the Board of Governors as of December 31, 1998 and all amendments and
periodic and current reports filed with the Board of Governors under the BHC Act
subsequent to December 31, 1998.
6.15. ABSENCE OF UNDISCLOSED LIABILITIES. At September 30, 1999, neither
PAHC nor PA Bank had any obligation or liability of any nature (whether
absolute, accrued, contingent, or otherwise, and whether due or to become due)
which was material, or which when combined with all similar obligations or
liabilities would have been material, to PAHC, except (a) as disclosed in the
PAHC Financial Statements, or (b) as set forth on Schedule 6.15 hereof, or (c)
for unfunded loan commitments made by PAHC or PA Bank in the ordinary course of
their business consistent with past practice. The amounts set up as current
liabilities for taxes in the PAHC Financial Statements are sufficient for the
payment of all federal, state, local and foreign income, payroll, withholding,
excise, sales, use, personal property, use and occupancy, business and
occupation, mercantile, real estate, gross receipts, license, employment,
severance, stamp, premium, windfall profits, social security (or similar
unemployment), disability, transfer, registration, value added, alternative, or
add-on minimum, estimated, or capital stock and franchise tax and other tax of
any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not ("Tax" or "Taxes") accrued in accordance with generally
accepted accounting principles and unpaid at September 30, 1999. Since September
30, 1999, neither PAHC nor PA Bank has incurred or paid any obligation or
liability that would be material (on a consolidated basis) to PAHC, except (x)
for obligations incurred or paid in connection with transactions by it in the
ordinary course of its business consistent with past practices, or (y) as set
forth on Schedule 6.15 hereof, or (z) as expressly contemplated herein.
6.16. ABSENCE OF CERTAIN DEVELOPMENTS. Since September 30, 1999, except as
set forth on Schedule 6.16 hereof, there has been (a) no Material Adverse Effect
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with respect to PAHC and PA Bank, (b) no material deterioration in the quality
of the consolidated loan portfolio of PAHC, and no material increase in the
consolidated level of nonperforming assets or non-accrual loans at PAHC or in
the level of its consolidated provision for credit losses or its consolidated
reserve for credit losses; (c) no declaration, setting aside, or payment by PAHC
or PA Bank of any regular dividend, special dividend, or other distribution with
respect to any class of capital stock of PAHC or PA Bank, other than, subject to
the dividend-coordination provisions of section 7.9 of this Agreement, customary
cash dividends paid by PAHC whose amounts have not exceeded $0.20 per share per
calendar quarter and the intervals between which dividends have not been more
frequent than past practice, and other than customary cash dividends paid by PA
Bank whose amounts have not exceeded past practice and the intervals between
which dividends have not been more frequent than past practice; (d) no
repurchase by PAHC of any of its capital stock; (e) no material loss,
destruction, or damage to any material property of PAHC or PA Bank, which loss,
destruction, or damage is not covered by insurance; and (f) no material
acquisition or disposition of any asset, nor any material contract outside the
ordinary course of business entered into by PAHC or PA Bank nor any substantial
amendment or termination of any material contract outside the ordinary course of
business to which PAHC or PA Bank is a party, nor any other transaction by PAHC
or PA Bank involving an amount in excess of $50,000 other than for fair value in
the ordinary course of its business. Since September 30, 1999, except as set
forth on Schedule 6.16 hereof, (x) each of PAHC and PA Bank has conducted its
business only in the ordinary course of such business and consistent with past
practice; (y) PAHC, on a consolidated basis, has maintained the quality of its
loan portfolio and that of each of its major components at approximately the
same level as existed at September 30, 1999; and (z) PAHC, on a consolidated
basis, has administered its investment portfolio pursuant to essentially the
same policies and procedures as existed during 1997 and 1998 and the first nine
months of 1999, and has taken no action to lengthen the average maturity of the
investment portfolio, or of any significant category thereof, to any material
extent.
6.17. RESERVE FOR CREDIT LOSSES. The most recent of the PAHC Financial
Statements reflect a consolidated reserve for credit losses that is adequate in
accordance with generally accepted accounting principles to absorb reasonably
anticipated losses in the consolidated loan and lease portfolios of PAHC, in
view of the size and character of such portfolios, current economic conditions,
and other pertinent factors. Management reevaluates the adequacy of such reserve
quarterly based on portfolio performance, current economic conditions, and other
factors.
6.18. TAX MATTERS.
(a) Except as set forth on Schedule 6.18 hereof, all Tax returns and
reports required to be filed by or on behalf of PAHC or PA Bank have been timely
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ending on or
before December 31, 1998, and all returns filed are complete and accurate and
properly reflect its Taxes for the periods covered thereby. All Taxes shown or
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required to be shown on filed returns have been paid, except for any not yet due
and payable. As of the date hereof, there is no audit, examination, deficiency,
or refund litigation or tax claim or any notice of assessment or proposed
assessment by the IRS or any other taxing authority, or any other matter in
controversy with respect to any Taxes that might result in a determination
adverse to PAHC or PA Bank, except as reserved against in the PAHC Financial
Statements. All Taxes due with respect to completed and settled examinations or
concluded litigation have been properly accrued or paid.
(b) Except as set forth on Schedule 6.18 hereof, neither PAHC nor PA
Bank has executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect.
(c) To the extent any Taxes are due from, but have not yet been paid
by, PAHC or PA Bank for the period or periods beginning January 1, 1999 or
thereafter through and including the Effective Time, adequate provision on an
estimated basis has been made for the payment of such taxes by establishment of
appropriate tax liability accounts on the monthly financial statements of PAHC.
(d) Deferred Taxes of PAHC and PA Bank have been provided for in
accordance with generally accepted accounting principles as in effect on the
date of this Agreement.
(e) The deductions of PA Bank for bad debts taken and the reserve of PA
Bank for loan losses for federal income tax purposes at December 31, 1998, were
not greater than the maximum amount permitted under the provisions of section
585 of the Code.
(f) Other than liens arising under the laws of the United States or the
Commonwealth of Pennsylvania with respect to Taxes assessed and not yet due and
payable, there are no tax liens on any of the properties or assets of PAHC or PA
Bank.
(g) PAHC and PA Bank (i) have timely filed all information returns or
reports required to be filed with respect to Taxes, including but not limited to
those required by sections 6041, 6041A, 6042, 6045, 6049, 6050H, and 6050J of
the Code, (ii) have properly and timely provided to all persons, other than
taxing authorities, all information reports or other documents (for example,
Form 1099s, Form W-2s, and so forth) required to be provided to such persons
under applicable law, and (iii) have exercised due diligence in obtaining
certified taxpayer identification numbers as required under applicable law.
(h) The taxable year end of PAHC for federal income tax purposes is,
and since the inception of PAHC has continuously been, December 31.
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(i) PAHC and PA Bank have in all material respects satisfied all
federal, state, local, and foreign withholding tax requirements including but
not limited to income, social security, and employment tax withholding.
(j) Neither PAHC nor PA Bank (i) is, or has been, a member of a group
filing a consolidated, combined, or unitary tax return, other than a group the
common parent of which is or was PAHC, or (ii) has any liability for the Taxes
of any person (other than PAHC and PA Bank) under Treas. Reg. ss. 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
6.19. CONSOLIDATED NET WORTH. The consolidated net worth of PAHC on the
date of this Agreement, as determined in accordance with generally accepted
accounting principles but without regard to the change in unrealized gains and
losses on securities (net of reclassification adjustment and tax effects)
between September 30, 1999 and the date of this Agreement, is not less than the
sum of (a) $31,906,000, (b) the proceeds to PAHC of the sale of treasury stock
since September 30, 1999, and (c) the proceeds to PAHC of the exercise of stock
options to purchase shares of PAHC Common Stock since September 30, 1999.
6.20. EXAMINATIONS. To the extent consistent with law, PAHC has heretofore
disclosed to NBTB relevant information contained in the most recent
safety-and-soundness, compliance, Community Reinvestment Act, and other Reports
of Examination with respect to PAHC issued by the Board of Governors and the
most recent safety-and-soundness, compliance, Community Reinvestment Act, and
other Reports of Examination with respect to PA Bank issued by the OCC. Such
information so disclosed consists of all material information with respect to
the financial, operational, and legal condition of the entity under examination
which is included in such reports.
6.21. REPORTS. Since January 1, 1996, each of PAHC and PA Bank has effected
all registrations and filed all reports and statements, together with any
amendments required to be made with respect thereto, which it was required to
effect or file with (a) the Board of Governors, (b) the OCC, (c) the FDIC, (d)
the United States Department of the Treasury, (e) the Department, (e) the
Securities and Exchange Commission, and (f) any other governmental or regulatory
authority or agency having jurisdiction over its operations. Each of such
registrations, reports, and documents, including the financial statements,
exhibits, and schedules thereto, does not contain any statement which, at the
time and in the light of the circumstances under which it was made, is false or
misleading with respect to any material fact or which omits to state any
material fact necessary in order to make the statements contained therein not
false or misleading.
6.22. FIRA COMPLIANCE AND OTHER TRANSACTIONS WITH AFFILIATES. Except as set
forth on Schedule 6.22 hereof, (a) none of the officers, directors, or
beneficial holders of 5 percent or more of the common stock of PAHC or PA Bank
and no person "controlled" (as that term is defined in the Financial
Institutions Regulatory and Interest Rate Control Act of 1978) by PAHC or PA
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Bank (collectively, "Insiders") has any ongoing material transaction with PAHC
or PA Bank on the date of this Agreement; (b) no Insider has any ownership
interest in any business, corporate or otherwise, which is a party to, or in any
property which is the subject of, business arrangements or relationships of any
kind with PAHC or PA Bank not in the ordinary course of business; and (c) all
other extensions of credit by PAHC or PA Bank to any Insider have heretofore
been disclosed in writing by PAHC to NBTB.
6.23. SEC REGISTERED SECURITIES. Other than the PAHC Common Stock, no
equity or debt securities of PAHC or PA Bank are registered or required to be
registered under the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
6.24. LEGAL PROCEEDINGS. Except as disclosed in the PAHC Financial
Statements or as set forth on Schedule 6.24 hereof, there is no claim, action,
suit, arbitration, investigation, or other proceeding pending against PAHC or PA
Bank before any court, governmental agency, authority or commission, arbitrator,
or "impartial mediator" or, to the best of the knowledge of PAHC and PA Bank,
threatened or contemplated against or affecting it or its property, assets,
interests, or rights, or any basis therefor of which notice has been given,
which, if adversely determined, would have a Material Adverse Effect on PAHC or
which otherwise could prevent, hinder, or delay consummation of the transactions
contemplated by this Agreement.
6.25. ABSENCE OF GOVERNMENTAL PROCEEDINGS. Except as set forth on Schedule
6.25 hereof, neither PAHC nor PA Bank is a party defendant or respondent to any
pending legal, equitable, or other proceeding commenced by any governmental
agency and, to the best of the knowledge of PAHC and PA Bank, no such proceeding
is threatened.
6.26. FEDERAL DEPOSIT INSURANCE.
(a) The deposits held by PA Bank are insured within statutory limits by
the Bank Insurance Fund of the FDIC (the "BIF") pursuant to the provisions of
the Federal Deposit Insurance Act, as amended (12 U.S.C. ss. 1811 ET SEQ.) (the
"FDI Act"), and PA Bank has paid all regular premiums and special assessments
and filed all related reports and statements required under the FDI Act.
(b) PA Bank is a member of and pays insurance assessments to the BIF.
None of the deposits of PA Bank are insured by the Savings Association Insurance
Fund of the FDIC (the "SAIF"), and PA Bank pays no insurance assessments to the
SAIF.
6.27. OTHER INSURANCE. Each of PAHC and PA Bank carries insurance with
reputable insurers, including blanket bond coverage, in such amounts as are
reasonable to cover such risks as are customary in relation to the character and
location of its properties and the nature of its businesses. All such policies
of insurance are in full force and effect, and no notice of cancellation has
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been received. All premiums to date have been paid in full. Neither PAHC nor PA
Bank is in default with respect to any such policy which is material to it.
6.28. LABOR MATTERS.
(a) Neither PAHC nor PA Bank is a party to or bound by any collective
bargaining contracts with respect to any employees of PAHC or PA Bank. Since
their respective inceptions there has not been, nor to the best of the knowledge
of PAHC and PA Bank was there or is there threatened, any strike, slowdown,
picketing, or work stoppage by any union or other group of employees against
PAHC or PA Bank or any of its premises, or any other labor trouble or other
occurrence, event, or condition of a similar character. As of the date hereof,
neither PAHC nor PA Bank is aware of any attempts to organize a collective
bargaining unit to represent any of its employee groups.
(b) As of the date hereof, each of PAHC and PA Bank is, to the best of
its knowledge, in compliance in all material respects with all federal and state
laws, regulations, and orders respecting employment and employment practices
(including Title VII of the Civil Rights Act of 1964), terms and conditions of
employment, and wages and hours; and neither PAHC nor PA Bank is engaged in any
unfair labor practice. As of the date hereof, except as set forth on Schedule
6.28 hereof, no dispute exists between PAHC or PA Bank and any of its employee
groups regarding any employee organization, wages, hours, or conditions of
employment which would materially interfere with the business or operations of
PAHC or PA Bank.
6.29. EMPLOYEE BENEFIT PLANS.
(a) Schedule 6.29 hereto contains a complete list of all pension,
retirement, stock purchase, stock bonus, stock ownership, stock option,
performance share, stock appreciation right, phantom stock, savings, and
profit-sharing plans, all employment, deferred compensation, consulting, bonus,
and collective bargaining agreements, and group insurance contracts and other
incentive, welfare, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
and vacation plans, contracts, and arrangements and employee benefit plans and
agreements, whether or not subject to ERISA, whether formal or informal, whether
written or oral, whether legally binding or not, under which any current or
former employee of PAHC or PA Bank has any present right to future benefits or
payments or under which PAHC or PA Bank has any present or future liability
(together, the "PAHC Plans").
(b) As to each of the PAHC Plans, PAHC has made available to NBTB true,
complete, current, and accurate copies of (i) the executed document or documents
governing the plan, including the related trust agreement, insurance policy, and
summary plan description (or other description in the case of an unwritten
plan); (ii) the most recent and prior two years' actuarial and financial report
prepared with respect to the plan if it constitutes a "qualified plan" under
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section 401(a) of the Code; (iii) the Forms 5500 with all schedules for the last
three years; (iv) all IRS rulings, determination letters, and any open requests
for such rulings and letters that pertain to the plan; and (v) to the extent
they pertain to the plan, attorneys' responses to auditors' requests for
information for the last three years.
(c) Except for funding obligations and liabilities to the Pension
Benefit Guaranty Corporation ("PBGC") pursuant to section 4007 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), all of which have
been fully paid, neither PAHC nor PA Bank has any tax, penalty, or liability
with respect to any PAHC Plan under ERISA, the Code, or any other applicable
law, regulation, or ruling. As to each PAHC Plan with respect to which a Form
5500 has been filed, no material change has occurred with respect to the matters
covered by the most recent Form 5500 since the date thereof, other than regular
accruals and contributions.
(d) Each PAHC Plan intended to be a "qualified plan" under the Code
complies with ERISA and applicable provisions of the Code. Neither PAHC nor PA
Bank has any material liability under any PAHC Plan which is not reflected on
the PAHC Financial Statements (other than such normally unrecorded liabilities
under the Plans for sick leave, holiday, education, bonus, vacation, incentive
compensation, and anniversary awards, provided that such liabilities are not in
any event material). There have not been any "prohibited transactions" with
respect to any PAHC Plan within the meaning of section 406 of ERISA or, where
applicable, section 4975 of the Code, nor have there been any "reportable
events" within section 4043 of ERISA nor any accumulated funding deficiency
within section 302 of ERISA or section 402 of the Code. Neither PAHC nor PA Bank
nor any entity under common control under section 414(b), (c), or (m) of the
Code has or had any obligation to contribute to any multiemployer plan. As to
each PAHC Plan that is subject to Title IV of ERISA, the value of assets of such
PAHC Plan is at least equal to the present value of the vested and unvested
accrued benefits in such PAHC Plan on a termination and ongoing basis, based
upon applicable PBGC regulations and the actuarial methods and assumptions used
in the most recent actuarial report. Except as set forth on Schedule 6.29
hereof, neither PAHC nor PA Bank has any obligation to provide retiree welfare
benefits.
(e) No action, claim, or demand of any kind has been brought or
threatened by any potential claimant or representative of such a claimant under
any plan, contract, or arrangement referred to in subsection (a) of this section
6.29, other than routine claims for benefits in the ordinary course, where PAHC
or PA Bank may be either (i) liable directly on such action, claim, or demand;
or (ii) obligated to indemnify any person, group of persons, or entity with
respect to such action, claim, or demand which is not fully covered by insurance
maintained with reputable, responsible financial insurers or by a self-insured
plan.
6.30. COMPENSATION. Schedule 6.30 hereto contains a true and correct
statement of the names, relationships with PAHC and PA Bank, present rates of
compensation (whether in the form of salary, bonuses, commissions, or other
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supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal year ended December 31, 1998 of each director, officer, or other
employee of PAHC and PA Bank whose aggregate compensation for the fiscal year
ended December 31, 1998 exceeded $60,000 or whose aggregate compensation at
present exceeds the rate of $60,000 per annum. Except as set forth on Schedule
6.30 hereto, since December 31, 1998 neither PAHC nor PA Bank has changed the
rate of compensation of any of its directors, officers, employees, agents,
dealers, or distributors, nor has any PAHC Plan or program been instituted or
amended to increase benefits thereunder. Except as set forth on Schedule 6.30
hereto, there is no contract, agreement, plan, arrangement, or understanding
covering any person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by PAHC or PA Bank by reason
of section 280G of the Code.
6.31. FIDUCIARY ACTIVITIES. PA Bank engages and, since January 1, 1998, has
engaged in (a) no fiduciary or custodial activity that would require its
qualification or registration under the laws of any jurisdiction and (b) no
advisory activity that would require it to register under the Investment
Advisers Act of 1940.
6.32. ENVIRONMENTAL LIABILITY.
(a) Except as set forth on Schedule 6.32 hereof, neither PAHC nor PA
Bank is in violation of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including those arising under
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act, the Federal Clean Air Act, the Toxic Substances Control Act or any state or
local statute, regulation, ordinance, order or decree relating to health, safety
or the environment ("Environmental Laws").
(b) Except as set forth on Schedule 6.32 hereof, neither PAHC, PA Bank,
nor, to the best of the knowledge of either of them, any borrower of PAHC or of
PA Bank has received notice that it has been identified by the United States
Environmental Protection Agency as a potentially responsible party under CERCLA
with respect to a site listed on the National Priorities List, 40 C.F.R. Part
300 Appendix B, nor has PAHC or PA Bank or, to the best of the knowledge of
either of them, any borrower of PAHC or of PA Bank received any notification
that any hazardous waste, as defined by 42 U.S.C. ss. 6903(5), any hazardous
substances, as defined by 42 U.S.C. ss. 9601(14), any "pollutant or
contaminant," as defined by 42 U.S.C. ss. 9601(33), or any toxic substance,
hazardous materials, oil, or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") that it has disposed of has been
found at any site at which a federal or state agency is conducting a remedial
investigation or other action pursuant to any Environmental Law.
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(c) No portion of any real property at any time owned or leased by PAHC
or PA Bank (collectively, the "PAHC Real Estate") has been used by PAHC or PA
Bank for the handling, processing, storage or disposal of Hazardous Substances
in a manner which violates any Environmental Laws and, to the best of the
knowledge of PAHC and PA Bank, no underground tank or other underground storage
receptacle for Hazardous Substances is located on any of the PAHC Real Estate.
In the course of its activities, neither PAHC nor PA Bank has generated or is
generating any hazardous waste on any of the PAHC Real Estate in a manner which
violates any Environmental Laws. There has been no past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping (collectively, a "Release") of
Hazardous Substances by PAHC or PA Bank on, upon, or into any of the PAHC Real
Estate. In addition, to the best of the knowledge of PAHC and PA Bank, except as
set forth on Schedule 6.32 hereof, there have been no such Releases on, upon, or
into any real property in the vicinity of any of the PAHC Real Estate that,
through soil or groundwater contamination, may be located on any of such PAHC
Real Estate.
(d) With respect to any real property at any time held as collateral
for any outstanding loan by PAHC or PA Bank (collectively, the "Collateral Real
Estate"), except as set forth on Schedule 6.32 hereof, neither PAHC nor PA Bank
has since January 1, 1988 received notice from any borrower thereof or third
party, and has no knowledge, that such borrower has generated or is generating
any hazardous waste on any of the Collateral Real Estate in a manner which
violates any Environmental Laws or that there has been any Release of Hazardous
Substances by such borrower on, upon, or into any of the Collateral Real Estate,
or that there has been any Release on, upon, or into any real property in the
vicinity of any of the Collateral Real Estate that, through soil or groundwater
contamination, may be located on any of such Collateral Real Estate.
(e) As used in this section 6.32, each of the terms "PAHC" and "PA
Bank" includes the applicable entity and any partnership or joint venture in
which it or any of its subsidiaries has an interest.
6.33. INTANGIBLE PROPERTY. To the best of the knowledge of PAHC and PA
Bank, each of them owns or possesses the right, free of the claims of any third
party, to use all material trademarks, service marks, trade names, copyrights,
patents, and licenses currently used by it in the conduct of its business. To
the best of the knowledge of PAHC and PA Bank, no material product or service
offered and no material trademark, service mark, or similar right used by either
of them infringes any rights of any other person, and, as of the date hereof,
neither PAHC nor PA Bank has received any written or oral notice of any claim of
such infringement.
6.34. REAL AND PERSONAL PROPERTY. Except as set forth on Schedule 6.34
hereof, and except for property and assets disposed of in the ordinary course of
business, each of PAHC and PA Bank possesses good and marketable title to and
owns, free and clear of any mortgage, pledge, lien, charge, or other encumbrance
or other third party interest of any nature whatsoever which would materially
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interfere with the business or operations of either PAHC or PA Bank, its real
and personal property and other assets, including without limitation those
properties and assets reflected in the PAHC Financial Statements as of September
30, 1999, or acquired by PAHC or PA Bank subsequent to the date thereof. The
leases pursuant to which PAHC and PA Bank lease real or personal property as
lessee are valid and effective in accordance with their respective terms; and
there is not, under any such lease, any material existing default or any event
which, with the giving of notice or lapse of time or otherwise, would constitute
a material default. The real and personal property leased by either PAHC or PA
Bank as lessee is free from any adverse claim which would materially interfere
with its business or operation taken as a whole. The material properties and
equipment owned or leased as lessee by PAHC and PA Bank are in normal operating
condition, free from any known defects, except such minor defects as do not
materially interfere with the continued use thereof in the conduct of its normal
operations.
6.35. LOANS, LEASES, AND DISCOUNTS.
(a) To the best of the knowledge of PAHC and PA Bank, each loan, lease,
and discount reflected as an asset of PAHC in the PAHC Financial Statements as
of September 30, 1999, or acquired since that date, is the legal, valid, and
binding obligation of the obligor named therein, enforceable in accordance with
its terms; and no loan, lease, or discount having an unpaid balance (principal
and accrued interest) in excess of $50,000, and no outstanding letter of credit
or commitment to extend credit having a notional amount in excess of $50,000, is
subject to any asserted defense, offset, or counterclaim known to PAHC or PA
Bank.
(b) Except as set forth on Schedule 6.35 hereof, neither PAHC nor PA
Bank holds any loans or loan-participation interests purchased from, or
participates in any loans originated by, any person other than PAHC or PA Bank.
6.36. MATERIAL CONTRACTS. Neither PAHC nor PA Bank nor any of the assets,
businesses, or operations of either of them is as of the date hereof a party to,
or is bound or affected by, or receives benefits under any material agreement,
arrangement, or commitment not cancelable by it without penalty, other than (a)
the agreements set forth on Schedule 6.36 hereof or set forth in one or more
other schedules of this Agreement, and (b) agreements, arrangements, or
commitments entered into in the ordinary course of its business consistent with
past practice, or, if there has been no past practice, consistent with prudent
banking practices.
6.37. EMPLOYMENT AND SEVERANCE ARRANGEMENTS. Schedule 6.37 hereof sets
forth
(a) all employment contracts granted by PAHC or PA Bank to any of its
officers, directors, shareholders, consultants, or other management officials
and any officer, director, shareholder, consultant, or management official of
any affiliate providing for increased or accelerated compensation in the event
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of a change of control with respect to PAHC or PA Bank or any other event
affecting the ownership, control, or management of PAHC or PA Bank; and
(b) all employment and severance contracts, agreements, and
arrangements between PAHC or PA Bank and any officer, director, consultant, or
other management official of any of them.
6.38. MATERIAL CONTRACT DEFAULTS. All contracts, agreements, leases,
mortgages, or commitments referred to in section 6.12(c) hereof are valid and in
full force and effect on the date hereof. As of the date of this Agreement and
as of the Effective Time, neither PAHC nor PA Bank is or will be in default in
any material respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which it is a party
or by which its assets, business, or operations may be bound or affected or
under which it or its assets, business, or operations receive benefits; and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a default.
6.39. CAPITAL EXPENDITURES. Except as set forth on Schedule 6.39 hereof,
neither PAHC nor PA Bank has any outstanding commitments to make capital
expenditures which in the aggregate exceed $50,000.
6.40. REPURCHASE AGREEMENTS. With respect to all agreements pursuant to
which PAHC or PA Bank has purchased securities subject to an agreement to
resell, it has a valid, perfected first lien or security interest in the
securities securing the agreement, and the value of the collateral securing each
such agreement equals or exceeds the amount of the debt secured by such
collateral under such agreement.
6.41. INTERNAL CONTROLS; YEAR 2000 PROBLEM.
(a) Each of PAHC and PA Bank maintains internal controls to provide
reasonable assurance to its board of directors and officers that its assets are
safeguarded, its records and reports are prepared in compliance with all
applicable legal and accounting requirements and with its internal policies and
practices, and applicable federal, state, and local laws and regulations are
complied with. These controls extend to the preparation of its financial
statements to provide reasonable assurance that the statements are presented
fairly in conformity with generally accepted accounting principles or, in the
case of PA Bank and to the extent different from generally accepted accounting
principles, accounting principles mandated by the OCC. The controls contain
self-monitoring mechanisms, and appropriate actions are taken on significant
deficiencies as they are identified.
(b) Each of PAHC and PA Bank has reviewed the areas within its business
and operations which could be adversely affected by, and has developed or is
developing a program to address on a timely basis the risk that certain computer
applications used by it or by any of its major suppliers may be unable to
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recognize and perform properly date-sensitive functions involving dates prior to
and after December 31, 1999 and prior to and after February 28, 2000 (the "Year
2000 Problem"). The Year 2000 Problem will not result, and is not reasonably
expected to result, in any Material Adverse Effect on PAHC or PA Bank.
6.42. DIVIDENDS. Neither PAHC nor PA Bank has paid any dividend to its
shareholders which caused its regulatory capital to be less than the amount then
required by applicable law, or which exceeded any other limitation on the
payment of dividends imposed by law, agreement, or regulatory policy.
6.43. BROKERS AND ADVISERS. Except as set forth on Schedule 6.43 hereof,
(a) there are no claims for brokerage commissions, finder's fees, or similar
compensation arising out of or due to any act of PAHC or PA Bank in connection
with the transactions contemplated by this Agreement or based upon any agreement
or arrangement made by or on behalf of PAHC or PA Bank, and (b) neither PAHC nor
PA Bank has entered into any agreement or understanding with any party relating
to financial advisory services provided or to be provided with respect to the
transactions contemplated by this Agreement.
6.44. INTEREST RATE RISK MANAGEMENT INSTRUMENTS.
(a) Schedule 6.44 contains a true, correct, and complete list of all
interest-rate swaps, caps, floors, and options agreements and other
interest-rate risk management arrangements to which PAHC or PA Bank is a party
or by which any of its properties or assets may be bound.
(b) All interest rate swaps, caps, floors, and option agreements and
other interest rate risk management arrangements to which PAHC or PA Bank is a
party or by which any of its properties or assets may be bound were entered into
in the ordinary course of its business and, to the best of its knowledge, in
accordance with prudent banking practice and applicable rules, regulations, and
regulatory policies and with counterparties believed to be financially
responsible at the time and are legal, valid, and binding obligations
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization, or similar laws affecting
the rights of creditors generally and the availability of equitable remedies),
and are in full force and effect. PAHC and PA Bank have duly performed in all
material respects of all of their respective obligations thereunder to the
extent that such obligations to perform have accrued; and to the best of the
knowledge of PAHC and PA Bank, there are no breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
6.45. ACCOUNTING TREATMENT. PAHC is aware of no reason why the Merger
will fail to qualify for "pooling of interests" accounting treatment.
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6.46. COBRA MATTERS. Schedule 6.46 sets forth the name, address, telephone
number, social security number, and date of Qualifying Event (as defined in
section 603 of ERISA) of each individuals covered under a group health plan that
is subject to section 601 of ERISA and sponsored by PAHC or PA Bank or any of
their subsidiaries who have experienced a Qualifying Event since June 7, 1998,
together with documentation of compliance by PAHC or PA Bank, as the case may
be, with applicable notice requirements.
6.47. DISCLOSURE. No representation or warranty hereunder and no
certificate, statement, or other document delivered by PAHC or PA Bank hereunder
or in connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to PAHC which reasonably might have a Material Adverse Effect on
PAHC or PA Bank which has not been disclosed in the PAHC Financial Statements or
a certificate or other document delivered to NBTB by PAHC. All copies of
documents delivered to NBTB by PAHC under this Agreement are true, correct, and
complete copies thereof and include all amendments, supplements, and
modifications thereto and all waivers thereunder.
6.48. REGULATORY AND OTHER APPROVALS. As of the date hereof, PAHC is not
aware of any reason why all material consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement, as shall be necessary for (a) consummation of
the transactions contemplated by this Agreement, and (b) the continuation after
the Effective Time of the business of PAHC and PA Bank as such business is
carried on immediately prior to the Effective Time, free of any conditions or
requirements which, in the reasonable opinion of PAHC, could have a Material
Adverse Effect on PAHC. As of the date hereof, PAHC is not aware of any reason
why all material consents and approvals shall not be procured from all other
persons and entities whose consent or approval shall be necessary for (y)
consummation of the transactions contemplated by this Agreement, or (z) the
continuation after the Effective Time of the business of PAHC and PA Bank as
such business is carried on immediately prior to the Effective Time.
7. COVENANTS OF PAHC.
PAHC covenants and agrees as follows:
7.1. RIGHTS OF ACCESS. In addition and not in limitation of any other
rights of access provided to NBTB herein, until the Effective Time PAHC and PA
Bank will give to NBTB and to its representatives, including its certified
public accountants, KPMG, full access during normal business hours to all of the
property, documents, contracts, books, and records of PAHC and PA Bank, and such
information with respect to their business affairs and properties as NBTB from
time to time may reasonably request.
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7.2. MONTHLY AND QUARTERLY FINANCIAL STATEMENTS; MINUTES OF MEETINGS AND
OTHER MATERIALS.
(a) PAHC and PA Bank will continue to prepare all of the monthly and
quarterly financial statements and financial reports to regulatory authorities
for the months and quarterly periods ending between October 1, 1999 and the
Effective Time which it customarily prepared during the period between January
1, 1996 and September 30, 1999 and shall promptly provide NBTB with copies of
all such financial statements and reports. All of such financial statements and
reports, including the related notes, schedules, and memorandum items, will have
been prepared in accordance with generally accepted accounting principles
consistently applied in all material respects (except that Call Reports may be
prepared in accordance with the official instructions applicable thereto at the
time of filing).
(b) PAHC and PA Bank shall promptly provide NBTB with (i) copies of all
of its periodic reports to directors and to shareholders, whether or not such
reports were prepared or distributed in connection with a meeting of the board
of directors or a meeting of the shareholders, prepared or distributed between
the date of this Agreement and the Effective Time, and (ii) complete copies of
all minutes of meetings of its board of directors and shareholders which
meetings take place between the date of this Agreement and the Effective Time,
certified by the secretary or cashier or an assistant secretary or assistant
cashier of PAHC or PA Bank, as the case may be.
(c) From the date of this Agreement to the Effective Time, PAHC shall,
contemporaneously with its filing with the SEC of any periodic or current report
pursuant to section 13 of the Exchange Act, deliver a copy of such report to
NBTB.
7.3. EXTRAORDINARY TRANSACTIONS. Without the prior written consent of NBTB,
neither PAHC nor PA Bank will, on or after the date of this Agreement: (a)
subject to section 7.9, declare or pay any cash dividends or property dividends
with respect to any class of its capital stock, with the exception of (i)
subject to the dividend-coordination provisions of section 7.9 of this
Agreement, customary periodic cash dividends paid by PAHC to holders of its
common stock in amounts not exceeding $0.20 per share per calendar quarter and
at intervals that are not shorter than past practice, and (ii) customary cash
dividends paid by PA Bank whose amounts have not exceeded past practice and at
intervals that are not shorter than past practice; (b) declare or distribute any
stock dividend, authorize a stock split, or authorize, issue or make any
distribution of its capital stock or any other securities (except for issuances
of PAHC Common Stock upon exercise of stock options outstanding on the date of
this Agreement), or grant any options to acquire such additional securities; (c)
either (i) merge into, consolidate with, or sell or otherwise dispose of its
assets to any other corporation or person, or enter into any other transaction
or agree to effect any other transaction not in the ordinary course of its
business except as explicitly contemplated herein, or (ii) engage in any
discussions concerning such a possible transaction except as explicitly
contemplated herein unless the board of directors of PAHC, based upon the advice
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of Blank Rome Comisky & McCauley LLP, determines in good faith that such action
is required for the board of directors to comply with its fiduciary duties to
stockholders imposed by law; (d) convert the charter or form of entity of PA
Bank from that in existence on the date of this Agreement to any other charter
or form of entity; (e) make any direct or indirect redemption, purchase, or
other acquisition of any of its capital stock; (f) except in the ordinary course
of its business or to accomplish the transactions contemplated by this
Agreement, incur any liability or obligation, make any commitment or
disbursement, acquire or dispose of any property or asset, make any contract or
agreement, pay or become obligated to pay any legal, accounting, or
miscellaneous other expense, or engage in any transaction; (g) other than in the
ordinary course of business, subject any of its properties or assets to any
lien, claim, charge, option, or encumbrance; (h) enter into or assume any one or
more commitments to make capital expenditures, any of which individually exceeds
$20,000 or which in the aggregate exceed $50,000; (i) except for increases in
the ordinary course of business in accordance with past practices, which
together with all other compensation rate increases do not exceed 4.5 percent
per annum of the aggregate payroll as of September 30, 1999, and except as
explicitly contemplated by this Agreement, increase the rate of compensation of
any employee or enter into any agreement to increase the rate of compensation of
any employee; (j) except as otherwise required by law, create or modify any
pension or profit sharing plan, bonus, deferred compensation, death benefit, or
retirement plan, or the level of benefits under any such plan, nor increase or
decrease any severance or termination pay benefit or any other fringe benefit;
(k) enter into any employment or personal services contract with any person or
firm, including without limitation any contract, agreement, or arrangement
described in section 6.37(a) hereof, except directly to facilitate the
transactions contemplated by this Agreement; nor (l) purchase any loans or
loan-participation interests from, or participate in any loans originated by,
any person other than PAHC or PA Bank.
7.4. PRESERVATION OF BUSINESS. Each of PAHC and PA Bank will (a) carry on
its business and manage its assets and properties diligently and substantially
in the same manner as heretofore; (b) maintain the ratio of its loans to its
deposits at approximately the same level as existed at September 30, 1999, as
adjusted to allow for seasonal fluctuations of loans and deposits of a kind and
amount experienced traditionally by it; (c) manage its investment portfolio in
substantially the same manner and pursuant to substantially the same investment
policies as in 1997 and 1998, and will take no action to change to any material
extent the percentage which its investment portfolio bears to its total assets,
or to lengthen to any material extent the average maturity of its investment
portfolio, or of any significant category thereof; (d) use commercially
reasonable efforts to continue in effect its present insurance coverage on all
properties, assets, business, and personnel; (e) use commercially reasonable
efforts to preserve its business organization intact, to keep available its
present employees, and to preserve its present relationships with customers and
others having business dealings with it; (f) not do anything and not fail to do
anything which will cause a breach of or default in any contract, agreement,
commitment, or obligation to which it is a party or by which it may be bound;
(g) conduct its affairs so that at the Effective Time none of its
representations and warranties will be inaccurate, none of its covenants and
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agreements will be breached, and no condition in this Agreement will remain
unfulfilled by reason of its actions or omissions; and (h) not amend its
articles of incorporation or bylaws.
7.5. COMFORT LETTER. At the time of the effectiveness of the Registration
Statement, but prior to the mailing of the Joint Proxy Statement, and on the
date of the Effective Time, PAHC shall furnish NBTB with a letter from KPMG LLP,
in its capacity as the independent auditors of PAHC, in form and substance
acceptable to NBTB, stating that (a) they are independent accountants with
respect to PAHC within the meaning of the Securities Act and the published rules
and regulations thereunder, (b) in their opinion the consolidated financial
statements of PAHC included in the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the published rules and regulations thereunder, and (c) a
reading of the latest available unaudited consolidated financial statements of
PAHC and unaudited financial statements of PA Bank and inquiries of certain
officials of PAHC and PA Bank responsible for financial and accounting matters
as to transactions and events since the date of the most recent consolidated
statement of condition included in their most recent audit report with respect
to PAHC did not cause them to believe that (i) such latest available unaudited
consolidated financial statements of PAHC are not stated on a basis consistent
with that followed in PAHC's audited consolidated financial statements; or (ii)
except as disclosed in the letter, at a specified date not more than five
business days prior to the date of such letter, there was any change in PAHC's
capital stock or any change in consolidated long-term debt or any decrease in
the consolidated net assets of PAHC or the consolidated allowance for loan and
lease losses of PAHC as compared with the respective amounts shown in the most
recent PAHC audited consolidated financial statements. The letter shall also
cover such other matters pertaining to PAHC's and PA Bank's financial data and
statistical information included in the Registration Statement as may reasonably
be requested by NBTB.
7.6. AFFILIATES' AGREEMENTS.
(a) PAHC will furnish to NBTB (i) a list of all persons known to PAHC
who at the date of this Agreement and (ii) if different from the list required
by section 7.6(a)(i), a list of all persons known to PAHC who at the date of
PAHC's special meeting of shareholders to vote upon the transactions
contemplated by this Agreement may be deemed to be "affiliates" of PAHC within
the meaning of Rule 145 under the Securities Act and for purposes of qualifying
the Merger for "pooling of interests" accounting treatment.
(b) PAHC will use commercially reasonable efforts to cause each such
"affiliate" of PAHC to deliver to NBTB on or before the date of this Agreement
(or, in the case of any person who becomes an "affiliate" of PAHC after the date
of this Agreement, not later than ten days after such person becomes an
"affiliate" of PAHC) an Affiliates Agreement.
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7.7. POOLING TREATMENT.
(a) PAHC will take no action that would prevent or impede the Merger
from qualifying for "pooling of interests" accounting treatment or KPMG from
delivering the Pooling Letters.
(b) PAHC shall deliver to KPMG such certificates or representations as
KPMG may reasonably request to enable it to deliver the Pooling Letters.
7.8. SHAREHOLDERS' MEETING. PAHC shall hold a meeting of its shareholders
in accordance with the BCL as promptly as possible after the effectiveness of
the Registration Statement, after at least twenty days' prior written notice
thereof to the shareholders of PAHC, to consider and vote upon the adoption of
this Agreement. Subject to its fiduciary duty to shareholders, the board of
directors of PAHC shall approve this Agreement and recommend to its shareholders
that it be adopted.
7.9. DIVIDEND COORDINATION. After the date of this Agreement, each of NBTB
and PAHC shall coordinate with the other the declaration of any dividends in
respect of NBTB Common Stock and PAHC Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties hereto
that holders of PAHC Common Stock shall not receive two dividends, or fail to
receive one dividend, for any quarter with respect to their shares of PAHC
Common Stock and any shares of NBTB Common Stock any such holder receives in
exchange therefor in the Merger.
7.10. INCONSISTENT ACTIVITIES.
(a) Subject to subsection (b) of this section 7.10, unless and until
the Merger has been consummated or this Agreement has been terminated in
accordance with its terms, neither PAHC nor PA Bank will (a) solicit or
encourage, directly or indirectly, any inquiries or proposals (each an
"Alternative Proposal") to acquire more than 1 percent of the PAHC Common Stock
or any capital stock of PA Bank or any significant portion of the assets of
either of them (whether by tender offer, merger, purchase of assets, or other
transactions of any type) (each an "Alternative Transaction"); (b) afford any
third party which may be considering an Alternative Proposal or Alternative
Transaction access to its properties, books or records except as required by
mandatory provisions of law; (c) enter into any discussions or negotiations for,
or enter into any agreement or understanding which provides for, any Alternative
Transaction, or (d) authorize or permit any of its directors, officers,
employees or agents to do or permit any of the foregoing. If PAHC or PA Bank
becomes aware of any Alternative Proposal or of any other matter which could
adversely affect this Agreement or the Merger, PAHC and PA Bank shall
immediately give notice thereof to NBTB.
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(b) Nothing contained in subsection (a) of this section 7.10 shall
prohibit the board of directors of PAHC from furnishing information to or
entering into discussions or negotiations with any person that makes an
unsolicited bona fide Alternative Proposal if, and only to the extent that, (i)
the board of directors of the Company, based upon the advice of Blank Rome
Comisky & McCauley LLP, determines in good faith that such action is required
for the board of directors to comply with its fiduciary duties to stockholders
imposed by law, (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person, PAHC provides written notice to
NBTB to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person, and (iii) PAHC keeps NBTB
informed of the status and all material information with respect to any such
discussions or negotiations.
(c) Nothing in subsection (b) of this section 7.10 or in subsection (c)
of section 7.3 of this Agreement shall (i) permit PAHC to terminate this
Agreement (except as specifically provided in section 11.1 or 11.2 of this
Agreement), (ii) permit PAHC or PA Bank to enter into any agreement with respect
to an Alternative Transaction for as long as this Agreement remains in effect
(it being agreed that for as long as this Agreement remains in effect, PAHC and
PA Bank shall not enter into any agreement with any person that provides for, or
in any way facilitates, an Alternative Transaction (other than a confidentiality
agreement in customary form)), or (iii) affect any other obligation of PAHC or
PA Bank under this Agreement.
7.11. COBRA OBLIGATIONS. For all individuals covered under a group health
plan that is subject to section 601 of ERISA and sponsored by PAHC or PA Bank or
any of their subsidiaries, and who experience a Qualifying Event (as defined in
section 603 of ERISA) within thirty days of the date of this Agreement, PAHC or
PA Bank, as the case may be, shall remain responsible for providing all notices
and election forms necessary to comply with ERISA and the Code, and will take
all steps necessary to implement elections pursuant to such notices.
7.12. UPDATED SCHEDULES. Not less than fifteen business days prior to the
Effective Time and as of the Effective Time, PAHC will deliver to NBTB any
updates to the schedules to its representations which may be required to
disclose events or circumstances arising after the date hereof. Such schedules
shall be updated only for the purpose of making the representations and
warranties contained in this Agreement to which such part of such schedules
relate true and correct in all material respects as of the date such schedule is
updated, and the updated schedule shall not have the effect of making any
representation or warranty contained in this Agreement true and correct in all
material respects as of a date prior to the date of such updated schedule. For
purposes of determining whether the condition set forth in section 4.1 to NBTB's
obligations have been met, any such updated schedules delivered to NBTB shall be
disregarded unless NBTB shall have agreed to accept any changes reflected in
such updated schedules.
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7.13. SUBSEQUENT EVENTS. Until the Effective Time, PAHC will immediately
advise NBTB in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by PAHC of a covenant contained in this Agreement
impossible or make such performance materially more difficult than in the
absence of such fact or occurrence, or which (if existing and known at the time
of the Effective Time) would cause a condition to NBTB's obligations under this
Agreement not to be fully satisfied.
8. REPRESENTATIONS AND WARRANTIES OF NBTB.
NBTB represents and warrants to PAHC as follows:
8.1. ORGANIZATION, POWERS, AND QUALIFICATION. NBTB is a corporation which
is duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own and operate its properties and assets, to lease properties used
in its business, and to carry on its business as now conducted. NBTB owns or
possesses in the operation of its business all franchises, licenses, permits,
branch certificates, consents, approvals, waivers, and other authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now conducted, except for those where the failure of such ownership or
possession would not have a Material Adverse Effect on NBTB. NBTB is duly
qualified and licensed to do business and is in good standing in every
jurisdiction with respect to which the failure to be so qualified or licensed
could result in a Material Adverse Effect on NBTB.
8.2. EXECUTION AND PERFORMANCE OF AGREEMENT. Provided that prior to the
Effective Time the shareholders of NBTB approve the Share Increase Amendment and
an appropriate Certificate of Amendment is filed with the Delaware Secretary of
State reflecting such approval, NBTB has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its respective
terms.
8.3. BINDING OBLIGATIONS; DUE AUTHORIZATION. This Agreement constitutes the
valid, legal, and binding obligations of NBTB enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar law, or by general principles of
equity. The execution, delivery, and performance of this Agreement and the
transactions contemplated thereby have been duly and validly authorized by the
board of directors of NBTB. No other corporate proceedings on its part are
necessary to authorize this Agreement or the carrying out of the transactions
contemplated hereby.
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8.4. ABSENCE OF DEFAULT. Provided that prior to the Effective Time the
shareholders of NBTB approve the Share Increase Amendment and an appropriate
Certificate of Amendment is filed with the Delaware Secretary of State
reflecting such approval, none of the execution or the delivery of this
Agreement, the consummation of the transactions contemplated hereby, or the
compliance with or fulfillment of the terms hereof will conflict with, or result
in a breach of any of the terms, conditions, or provisions of, or constitute a
default under the organizational documents or bylaws of NBTB. None of such
execution, consummation, or fulfillment will (a) conflict with, or result in a
material breach of the terms, conditions, or provisions of, or constitute a
material violation, conflict, or default under, or give rise to any right of
termination, cancellation, or acceleration with respect to, or result in the
creation of any lien, charge, or encumbrance upon, any of the property or assets
of NBTB pursuant to any material agreement or instrument under which it is
obligated or by which any of its properties or assets may be bound, including
without limitation any material lease, contract, mortgage, promissory note, deed
of trust, loan, credit arrangement or other commitment or arrangement of it in
respect of which it is an obligor, or (b) if the Merger is approved by the Board
of Governors under the BHC Act, or if the Board of Governors waives its
jurisdiction over the Holding Company Merger, and if the Bank Merger is approved
by the OCC, and if the transactions contemplated by this Agreement are approved
by the Department, violate any law, statute, rule, or regulation of any
government or agency to which NBTB is subject and which is material to its
operations, or (c) violate any judgment, order, writ, injunction, decree, or
ruling to which it or any of its properties or assets is subject or bound. None
of the execution or delivery of this Agreement, the consummation of the
transactions contemplated hereby, or the compliance with or fulfillment of the
terms hereof will require any authorization, consent, approval, or exemption by
any person which has not been obtained, or any notice or filing which has not
been given or done, other than approval of the transactions contemplated by this
Agreement by, notices to, or filings with by the Board of Governors, the OCC,
the SEC, state securities commissions, the Department, the Secretary of State of
the State of Delaware, and the Secretary of State of the Commonwealth of
Pennsylvania.
8.5. CAPITAL STRUCTURE.
(a) The authorized capital stock of NBTB as of the date of this
Agreement consists of (i) 2,500,000 shares of preferred stock, no par value,
stated value $1.00 per share ("NBTB Preferred Stock"), of which, as of the date
of this Agreement, no shares are issued or outstanding, and (ii) 15,000,000
shares of NBTB Common Stock, of which, as of the date of this Agreement,
12,440,384 shares have been duly issued and are validly outstanding and fully
paid, and 575, 405 additional shares are issued and held in the treasury of
NBTB. The aforementioned shares of NBTB Preferred Stock and NBTB Common Stock
are the only voting securities of NBTB authorized, issued, or outstanding as of
such date.
(b) None of the shares of NBTB Common Stock has been issued in
violation of the preemptive rights of any shareholder.
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(c) As of the date hereof, to the best of the knowledge of NBTB, and
except for this Agreement, there are no shareholder agreements, or other
agreements, understandings, or commitments relating to the right of any holder
or beneficial owner of more than 1 percent of the issued and outstanding shares
of any class of the capital stock of NBTB to vote or to dispose of his, her or
its shares of capital stock of NBTB.
8.6. BOOKS AND RECORDS. The books and records of each of NBTB and NBT Bank
fairly reflect the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly kept
and maintained and are in compliance in all material respects with all
applicable accounting and legal requirements. Each of NBTB and NBT Bank follows
generally accepted accounting principles applied on a consistent basis in the
preparation and maintenance of its books of account and financial statements,
including but not limited to the application of the accrual method of accounting
for interest income on loans, leases, discounts, and investments, interest
expense on deposits and all other liabilities, and all other items of income and
expense. Each of NBTB and NBT Bank has made all accruals in amounts which
accurately report income and expense in the proper periods in accordance with
generally accepted accounting principles. Each of NBTB and NBT Bank has filed
all material reports and returns required by any law or regulation to be filed
by it.
8.7. FINANCIAL STATEMENTS. NBTB has furnished to PAHC its consolidated
audited statement of condition as of each of December 31, 1996, December 31,
1997, and December 31, 1998, and its related audited consolidated statement of
income, consolidated statement of cash flows, and consolidated statement of
changes in stockholders' equity for each of the periods then ended, and the
notes thereto, and its consolidated unaudited statement of condition as of
September 30, 1999, and its related unaudited consolidated statement of income,
consolidated statement of cash flows, and consolidated statement of changes in
stockholders' equity for the period then ended, and the notes thereto, each as
filed with the SEC (collectively, the "NBTB Financial Statements"). All of the
NBTB Financial Statements, including the related notes, (a) except as indicated
in the notes thereto, were prepared in accordance with generally accepted
accounting principles consistently applied in all material respects (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), and (b) are in accordance with the books and records of
NBTB, (c) fairly reflect the consolidated financial position of NBTB as of such
dates, and the consolidated results of operations of NBTB for the periods ended
on such dates, and do not fail to disclose any material extraordinary or
out-of-period items, and (d) reflect, in accordance with generally accepted
accounting principles consistently applied in all material respects, adequate
provision for, or reserves against, the consolidated loan losses of NBTB as of
such dates.
8.8. NASDAQ REPORTING. Trading of NBTB Common Stock is reported on the
Nasdaq National Market.
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8.9. ABSENCE OF CERTAIN DEVELOPMENTS. Since September 30, 1999, there has
been (a) no Material Adverse Effect with respect to NBTB, and (b) no material
deterioration in the quality of the loan portfolio of NBTB or of any major
component thereof, and no material increase in the level of nonperforming assets
or nonaccrual loans at NBTB or in the level of its provision for credit losses
or its reserve for credit losses.
8.10. BROKERS AND ADVISERS. Other than with respect to MB&D, (a) there are
no claims for brokerage commissions, finder's fees, or similar compensation
arising out of or due to any act of NBTB in connection with the transactions
contemplated by this Agreement or based upon any agreement or arrangement made
by or on behalf of NBTB, and (b) NBTB has not entered into any agreement or
understanding with any party relating to financial advisory services provided or
to be provided with respect to the transactions contemplated by this Agreement.
8.11. DISCLOSURE. No representation or warranty hereunder and no
certificate, statement, or other document delivered by NBTB hereunder or in
connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to NBTB which might materially adversely affect its business,
assets, liabilities, financial condition, results of operations, or prospects
which has not been disclosed in the NBTB Financial Statements or a certificate
or other document delivered by NBTB to PAHC. Copies of all documents delivered
to PAHC by NBTB under this Agreement are true, correct, and complete copies
thereof and include all amendments, supplements, and modifications thereto and
all waivers thereunder.
8.12. REGULATORY AND OTHER APPROVALS. As of the date hereof, NBTB is not
aware of any reason why all material consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement, as shall be necessary for (a) consummation of
the transactions contemplated by this Agreement, and (b) the continuation after
the Effective Time of the business of NBTB as such business is carried on
immediately prior to the Effective Time, free of any conditions or requirements
which, in the reasonable opinion of NBTB, could have a Material Adverse Effect
on NBTB. As of the date hereof, NBTB is not aware of any reason why all material
consents and approvals shall not be procured from all other persons and entities
whose consent or approval shall be necessary for (y) consummation of the
transactions contemplated by this Agreement, or (z) the continuation after the
Effective Time of the business of NBTB as such business is carried on
immediately prior to the Effective Time.
9. COVENANTS OF NBTB.
NBTB covenants and agrees as follows:
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9.1.RIGHTS OF ACCESS. From the date hereof to the Effective Time, NBTB
shall give to PAHC and to its representatives, including its certified public
accountants, KPMG LLP, full access during normal business hours to all of the
property, documents, contracts, books, and records of NBTB, and such information
with respect to their business affairs and properties as PAHC from time to time
may reasonably request.
9.2. SECURITIES REPORTS. From the date hereof to the Effective Time, NBTB
shall, contemporaneously with the filing with the SEC of any periodic or current
report pursuant to section 13 of the Exchange Act, deliver a copy of such report
to PAHC.
9.3. SHAREHOLDERS' MEETING. NBTB shall hold a meeting of its shareholders
in accordance with the GCL as promptly as possible after the effectiveness of
the Registration Statement, after at least twenty days' prior written notice
thereof to the shareholders of NBTB, to consider and vote upon this Agreement,
it being agreed, however, that nothing in this Agreement shall require NBTB to
hold a special meeting of its shareholders within the thirty-day period prior to
its 2000 annual meeting of shareholders if NBTB proposes for the consideration
of its shareholders at such annual meeting that the issuance of shares of NBTB
Common Stock pursuant to this Agreement be approved and that this Agreement be
ratified. Subject to its fiduciary duty to shareholders, the board of directors
of NBTB shall recommend to its shareholders that the issuance of shares of NBTB
Common Stock pursuant to this Agreement be approved and that this Agreement be
ratified.
9.4. NASDAQ APPROVAL. NBTB shall use its commercially reasonable efforts
to cause the shares of NBTB Common Stock to be issued in the Merger to be
approved for inclusion on the Nasdaq National Market, subject to official notice
of issuance, prior to the Effective Time.
9.5. OPTIONS. At or prior to the Effective Time, NBTB shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of NBTB Common Stock for delivery upon exercise of options to purchase PAHC
Common Stock assumed by it in accordance with section 1.11 hereof. NBTB shall
use commercially reasonable efforts to maintain the effectiveness of the
registration statement that pertains to the shares subject to such options (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. NBTB shall at and after the
Effective Time have reserved sufficient shares of NBTB Common Stock for issuance
with respect to such options. NBTB shall also take any action required to be
taken under any applicable state blue sky or securities laws in connection with
the issuance of such shares.
9.6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Following the Effective
Time NBTB will take no action to abrogate or diminish any right accorded under
the articles of incorporation or by-laws of PAHC as they existed immediately
prior to the Effective Time to any person who, on or prior to the Effective
Time, was a director or officer of PAHC to indemnification from or against
losses, expenses, claims, demands, damages, liabilities, judgments, fines,
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penalties, costs, expenses (including without limitation reasonable attorneys
fees) and amounts paid in settlement pertaining to or incurred in connection
with any threatened or actual action, suit, claim, or proceeding (whether civil,
criminal, administrative, arbitration, or investigative) arising out of events,
matters, actions, or omissions occurring on or prior to the Effective Time. To
the extent not provided by the foregoing, following the Effective Time and to
the extent permitted by law, all rights to such indemnification accorded under
the articles of incorporation and by-laws of PAHC to any person who, on or prior
to the Effective Time, was a director or officer of PAHC shall survive the
Effective Time and, following the Merger, to the extent permitted by law, NBTB
will honor such obligations in accordance with their terms with respect to
events, acts, or omissions occurring prior to the Effective Time.
9.7. SUBSEQUENT EVENTS. Until the Effective Time, NBTB will immediately
advise PAHC in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by NBTB of a covenant contained in this Agreement
impossible or make such performance materially more difficult than in the
absence of such fact or occurrence, or which (if existing and known at the time
of the Effective Time) would cause a condition to PAHC's obligations under this
Agreement not to be fully satisfied.
10. CLOSING.
10.1. PLACE AND TIME OF CLOSING. Closing shall take place at the principal
executive offices of NBTB or at such other place as the parties choose,
commencing at 9:00 a.m., local time, on the date of the Effective Time, provided
that all conditions precedent to the obligations of the parties hereto to close
have then been met or waived.
10.2. EVENTS TO TAKE PLACE AT CLOSING. At the Closing, the following
actions will be taken:
(a) Such certificates and other documents as are required by this
Agreement to be executed and delivered at or prior to the Effective Time and
have not been so executed and delivered, and such other certificates and
documents as are mutually deemed by the parties to be otherwise desirable for
the effectuation of the Closing, will be so executed and delivered; and then
(b) the First Merger and the issuance of shares incident thereto shall
be effected; provided, however, that the administrative and ministerial aspects
of the issuance of shares incident to the Merger will be settled as soon
thereafter as shall be reasonable under the circumstances; and then
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(c) the Second Merger and the Bank Merger shall be effected.
11. TERMINATION, DAMAGES FOR BREACH, WAIVER, AND AMENDMENT.
11.1. TERMINATION BY REASON OF LAPSE OF TIME. This Agreement may be
terminated by any party on or after July 31, 2000, by instrument duly authorized
and executed and delivered to the other parties, unless (a) the Effective Time
shall have occurred on or before such date or (b) the failure of the Effective
Time to have occurred on or before such date has been due to the failure of the
party seeking to terminate this Agreement to perform or observe its covenants
and agreements as set forth herein.
11.2. GROUNDS FOR TERMINATION. This Agreement may be terminated by
written notice of termination at any time before the Effective Time (whether
before or after action by shareholders of PAHC or NBTB):
(a) by mutual consent of the parties hereto;
(b) by NBTB, upon written notice to PAHC given at any time (i) if any
of the representations and warranties of PAHC contained in section 6 hereof was
materially incorrect when made, or (ii) in the event of a material breach or
material failure by PAHC of any covenant or agreement of PAHC contained in this
Agreement which has not been, or cannot be, cured within thirty days after
written notice of such breach or failure is given to PAHC, and which inaccuracy,
breach, or failure, if continued to the Effective Time, would result in any
condition set forth in section 4 hereof not being satisfied;
(c) by PAHC, upon written notice to NBTB given at any time (i) if any
of the representations and warranties of NBTB contained in section 8 hereof was
materially incorrect when made, or (ii) in the event of a material breach or
material failure by NBTB of any covenant or agreement of NBTB contained in this
Agreement which has not been, or cannot be, cured within thirty days after
written notice of such breach or failure is given to NBTB, and which inaccuracy,
breach, or failure, if continued to the Effective Time, would result in any
condition set forth in section 4 hereof not being satisfied or (iii) if the
board of directors of PAHC, based upon the advice of Blank Rome Comisky &
McCauley LLP, determines in good faith that such termination is required for the
board of directors to comply with its fiduciary duties to stockholders imposed
by law by reason of an Alternative Proposal being made; provided that PAHC shall
notify NBTB promptly of its intention to terminate this Agreement or enter into
a definitive agreement with respect to any Alternative Proposal, but in no event
shall such notice be given less than 48 hours prior to the public announcement
of PAHC's termination of this Agreement;
(d) by PAHC, in accordance with the following provisions:
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(i) at any time during the three-business-day period beginning on
the Determination Date, if both of the following conditions are satisfied,
subject, however, to subsection 11.2(d)(ii):
(A) The Average Closing Price is less than $15.00; and
(B) The number, expressed as a percentage, obtained by
dividing the Average Closing Price by $16.75 is more than 15 percentage points
less than the Index Differential.
(ii) If PAHC chooses to exercise its right pursuant to this
section 11.2(d), it shall give immediate written notice thereof to NBTB. During
the three-business-day period commencing with receipt of such notice, NBTB shall
have the option to agree that the Exchange Ratio shall be 1.805 times $15.00
divided by the Average Closing Price. If NBTB so elects within such
three-business-day period, it shall give immediate written notice thereof to
PAHC, whereupon no termination shall have occurred pursuant to this section
11.2(d) and this Agreement shall remain in effect in accordance with its terms
(except that the Exchange Ratio shall be 1.805 times $15.00 divided by the
Average Closing Price).
(iii) DEFINITIONS. The following terms used in this section
11.2(d) shall have the meanings set forth in this Subparagraph (iii).
(A) DETERMINATION DATE. The seventh business day preceding
the Effective Time.
(B) INDEX PRICE. For any member of the Index Group, the
Average Closing Price calculated using, instead of NBTB Common Stock, the common
stock of that member of the Index Group.
(C) INDEX DIFFERENTIAL. The sum of the respective numbers
(expressed as percentages), for each of the members of the Index Group, obtained
by multiplying the weighting (as set forth in section 11.2(d)(iii)(D)) of that
member of the Index Group times the quotient of the Index Price for that member
of the Index Group divided by the Base Price (as set forth in section
11.2(d)(iii)(D)) for that member of the Index Group.
(D) INDEX GROUP. The twenty companies listed below, the common
stock of all of which shall be publicly traded and as to which there shall not
have been a publicly announced proposal between the day before the date of the
execution of this Agreement and the Determination Date for any such company to
be Acquired. In the event that the common stock of any such company ceases to be
publicly traded or a proposal to Acquire that company is announced between the
day before the date of the execution of this Agreement and the Determination
Date, such company will be removed from the Index Group, and the weights
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attributed to the remaining companies will be adjusted proportionately for
purposes of determining the Index Price. The twenty companies and the weights
attributed to them are as follows:
COMPANY WEIGHTING BASE PRICE
Arrow Financial Corporation, Glens Falls, NY 4.051% $20.2500
BSB Bancorp, Inc., Binghamton, NY 5.622% $20.9375
BT Financial Corporation, Johnstown, PA 9.340% $22.3750
CCBT Bancorp, Inc., Hyannis, MA 3.532% $15.1250
Century Bancorp, Inc., Medford, MA 1.589% $16.8750
Community Bank System, Inc., Dewitt, NY 4.796% $25.5625
Community Banks, Inc., Millersburg, PA 4.020% $22.4375
F&M Bancorp, Frederick, MD 5.810% $23.6250
Granite State Bankshares, Inc., Keene, NH 3.325% $21.8750
Harleysville National Corporation, Harleysville, PA 6.706% $32.2500
Independent Bank Corp., Rockland, MA 4.922% $13.3750
National Penn Bancshares, Inc., Boyertown, PA 12.082% $25.8750
Sandy Spring Bancorp, Inc., Olney, MD 6.765% $26.7500
State Bancorp, Inc., New Hyde Park, NY 2.805% $13.3125
Sterling Bancorp, New York, NY 3.810% $18.1250
Suffolk Bancorp, Riverhead, NY 4.350% $27.3125
Sun Bancorp, Inc., Vineland, NJ 3.010% $11.3750
U.S.B. Holding Co., Inc., Orangeburg, NY 6.282% $15.0625
Washington Trust Bancorp, Inc., Westerly, RI 5.095% $17.8125
Yardville National Bancorp, Mercerville, NJ 2.088% $12.0000
--------
100.000%
========
(E) ACQUIRE. A company within the Index Group is deemed to
have been "Acquired" in any combination in which, immediately thereafter, its
equity holders do not control more than 50 percent of the equity of the entity
resulting from the combination;
(e) by either NBTB or PAHC upon written notice given to the other if
the board of directors of either NBTB or PAHC shall have determined in its sole
judgment made in good faith, after due consideration and consultation with
counsel, that the Merger has become inadvisable or impracticable by reason of
the institution of litigation by the federal government or the government of the
State of New York or the Commonwealth of Pennsylvania to restrain or invalidate
the transactions contemplated by this Agreement;
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(f) by either NBTB or PAHC upon written notice given to the other if
any of the approvals referred to in section 3.1 (other than approvals that
relate solely to the Bank Merger) are denied and such denial has become final
and nonappealable;
(g) by either NBTB or PAHC upon written notice given to the other if
(i) the shareholders of either NBTB or PAHC shall have voted on and failed to
adopt this Agreement, at the meeting of such shareholders called for such
purpose, or (ii) the shareholders of NBTB shall have voted on and failed to
approve the Share Increase Amendment; or
(h) by either NBTB or PAHC upon written notice given to the other if
NBTB shall have been advised by KPMG that KPMG is unable to deliver its
favorable opinion under section 4.10 of this Agreement due to the action of a
party or one or more of the affiliates, directors, officers, or shareholders of
that party.
11.3. EFFECT OF TERMINATION. In the event of the termination and
abandonment hereof pursuant to the provisions of section 11.1 or section 11.2,
this Agreement shall become void and have no force or effect, without any
liability on the part of NBTB, PAHC, PA Bank, or their respective directors or
officers or shareholders, in respect of this Agreement. Notwithstanding the
foregoing, (a) as provided in section 12.4 of this Agreement, the
confidentiality agreement contained in that section shall survive such
termination; (b) the provisions of sections 11.3(b), 11.3(c), 12.1, and 12.11
shall survive; (c) if such termination is a result of any of the representations
and warranties of a party being materially incorrect when made or a result of
the material breach or material failure by a party of a covenant or agreement
hereunder, such party whose representations and warranties were materially
incorrect or who materially breached or failed to perform its covenant or
agreement shall be liable in the amount of $500,000 to the other party or
parties hereto that are not affiliated with it; and (d) if
(i) such termination is pursuant to section 11.2(c)(iii) of this
Agreement, or if
(ii) this Agreement is terminated for any reason specified in
section 11.2(b)(ii) of this Agreement and a definitive agreement with respect to
an Alternative Proposal is executed by PAHC or PA Bank within one year after
such termination,
then in either case, and in addition to any amount payable or paid under
subsection (c) of this section 11.3, PAHC shall be liable to NBTB for liquidated
damages in the further amount of $3,000,000, which amount will be payable to
NBTB in immediately available funds within two business days after such amount
becomes due. PAHC acknowledges that the agreements contained in subsection (d)
of this section 11.3 are an integral part of the transactions contemplated in
this Agreement and that, without these agreements, NBTB would not enter into
this Agreement.
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11.4. WAIVER OF TERMS OR CONDITIONS. Any of the terms or conditions of this
Agreement, to the extent legally permitted, may be waived at any time prior to
the Effective Time by the party which is, or whose shareholders are, entitled to
the benefit thereof, by action taken by that party (if an individual) or by the
board of directors of such party (if a corporation), or by its chairman, or by
its president; provided that such waiver shall be in writing and shall be taken
only if, in the judgment of the party, board of directors, or officer taking
such action, such waiver will not have a materially adverse effect on the
benefits intended hereunder to it or to the shareholders of its or his
corporation; and the other parties hereto may rely on the delivery of such a
waiver as conclusive evidence of such judgment and the validity of the waiver.
11.5. AMENDMENT. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law, this Agreement and the exhibits
hereto may be amended, supplemented, or interpreted at any time prior to the
Effective Time by written instrument duly authorized and executed by each of the
parties hereto; provided, however, that (except as specifically provided herein
or as may be approved by such shareholders) this Agreement may not be amended
after:
(a) the action by shareholders of PAHC in any respect that would change
(i) the amount or kind of shares, obligations, cash, property, or rights to be
received in exchange for or on conversion of the PAHC Common Stock; (ii) any
term of the certificate of incorporation of NBTB to be effected by the Merger;
or (iii) any of the terms and conditions of this Agreement if the change would
adversely affect the shareholders of PAHC, or
(b) the action by shareholders of NBTB in any respect that would change
(i) the amount or kind of shares, obligations, cash, property, or rights to be
received in exchange for the NBTB Common Stock to be delivered in the Merger;
(ii) any term of the certificate of incorporation of NBTB to be effected by the
Merger; or (iii) any of the terms and conditions of this Agreement if the change
would adversely affect the shareholders of NBTB.
12.GENERAL PROVISIONS.
12.1. ALLOCATION OF COSTS AND EXPENSES. Except as provided in this section,
each party hereto shall pay its own fees and expenses, including without
limitation the fees and expenses of its own counsel and its own accountants and
tax advisers, incurred in connection with this Agreement and the transactions
contemplated thereby. For purposes of this section, (i) the cost of printing the
Joint Proxy Statement shall be apportioned between NBTB and PAHC based upon the
number of copies each shall request to be printed, (ii) the cost of delivering
the Joint Proxy Statement and other material to be transmitted to shareholders
of NBTB shall be deemed to be incurred on behalf of NBTB, (iii) the cost of
delivering the Joint Proxy Statement and other material to be transmitted to
shareholders of PAHC shall be deemed to be incurred on behalf of PAHC, (iv) the
cost of registering under federal and state securities laws the stock of NBTB to
be received by the shareholders of PAHC shall be deemed to be incurred on behalf
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of NBTB, and (v) the cost of procuring the tax opinion referred to in section
3.4 of this Agreement shall be deemed to be incurred on behalf of PAHC.
12.2. MUTUAL COOPERATION.
(a) Subject to the terms and conditions herein provided, each party
shall use its best efforts, and shall cooperate fully with the other party, in
expeditiously carrying out the provisions of this Agreement and in expeditiously
making all filings and obtaining all necessary governmental approvals, and as
soon as practicable shall execute and deliver, or cause to be executed and
delivered, such governmental notifications and additional documents and
instruments and do or cause to be done all additional things necessary, proper,
or advisable under applicable law to consummate and make effective on the
earliest practicable date the transactions contemplated hereby.
(b) NBTB and PAHC shall promptly prepare and file with the SEC the
Joint Proxy Statement, and NBTB shall promptly prepare and file with the SEC the
Registration Statement in which the Joint Proxy Statement will be included as a
prospectus. NBTB and PAHC shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Each party will supply in a timely fashion
such information concerning such party as shall be necessary or appropriate for
inclusion in the Joint Proxy Statement and Registration Statement.
12.3. FORM OF PUBLIC DISCLOSURES. NBTB and PAHC shall mutually agree in
advance upon the form and substance of all public disclosures concerning this
Agreement and the transactions contemplated hereby.
12.4. CONFIDENTIALITY. NBTB, PAHC, and their respective subsidiaries shall
use all information that each obtains from the other pursuant to this Agreement
solely for the effectuation of the transactions contemplated by this Agreement
or for other purposes consistent with the intent of this Agreement. Neither
NBTB, PAHC, nor their respective subsidiaries shall use any of such information
for any other purpose, including, without limitation, the competitive detriment
of any other party. NBTB and PAHC shall maintain as strictly confidential all
information each of them learns from the other and shall, at any time after
termination of this Agreement in accordance with the terms thereof, upon the
request of the other, return promptly to it all documentation provided by it or
made available to third parties. Each of the parties may disclose such
information to its respective affiliates, counsel, accountants, tax advisers,
and consultants, provided that such parties are advised of the confidential
nature of such information and agree to be bound by the terms of this section
12.4. The confidentiality agreement contained in this section 12.4 shall remain
operative and in full force and effect, and shall survive the termination of
this Agreement.
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12.5. CLAIMS OF BROKERS.
(a) PAHC shall indemnify, defend, and hold NBTB harmless for, from, and
against any claim, suit, liability, fees, or expenses (including, without
limitation, attorneys' fees and costs of court) arising out of any claim for
brokerage commissions, finder's fees, or similar compensation arising out of or
due to any of its acts in connection with the transactions contemplated by this
Agreement or based upon any agreement or arrangement made by it or on its behalf
with respect to NBTB.
(b) NBTB shall indemnify, defend, and hold PAHC harmless for, from, and
against any claim, suit, liability, fees, or expenses (including, without
limitation, attorneys' fees and costs of court) arising out of any claim for
brokerage commissions, finder's fees, or similar compensation arising out of or
due to any of its acts in connection with any of the transactions contemplated
by this Agreement or based upon any agreement or arrangement made by it or on
its behalf with respect to PAHC.
12.6. INFORMATION FOR APPLICATIONS AND REGISTRATION STATEMENT.
(a) Each party represents and warrants that all information concerning
it which is included in any statement and application (including the
Registration Statement) made to any governmental agency in connection with the
transactions contemplated by this Agreement shall not, with respect to such
party, contain an untrue statement of a material fact or omit any material fact
required to be stated therein or necessary to make the statements made, in light
of the circumstances under which they were made, not misleading. The party so
representing and warranting will indemnify, defend, and hold harmless the other,
each of its directors and officers, each underwriter and each person, if any,
who controls the other within the meaning of the Securities Act, for, from and
against any and all losses, claims, suits, damages, expenses, or liabilities to
which any of them may become subject under applicable laws (including, but not
limited to, the Securities Act and the Exchange Act) and rules and regulations
thereunder and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any actions
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any such
application or statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the representing and
warranting party expressly for use therein. Each party agrees at any time upon
the request of the other to furnish to the other a written letter or statement
confirming the accuracy of the information contained in any proxy statement,
registration statement, report, or other application or statement, and
confirming that the information contained in such document was furnished
expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or draft or indicating the information
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not furnished expressly for use therein. The indemnity agreement contained in
this section 12.6(a) shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any of the other
parties, and shall survive the termination of this Agreement or the consummation
of the transactions contemplated thereby.
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement contained in section 12.6(a) of
this Agreement is for any reason held by a court of competent jurisdiction to be
unenforceable as to any or every party, then the parties in such circumstances
shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claims asserted) to which any party may be subject in such proportion as the
court of law determines based on the relative fault of the parties.
12.7. STANDARD OF MATERIALITY AND OF MATERIAL ADVERSE EFFECT.
(a) For purposes of sections 4, 6, and 7 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of PAHC as of
September 30, 1999, as determined in accordance with generally accepted
accounting principles.
(b) For purposes of sections 5, 8, and 9 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of NBTB as of
September 30, 1999, as determined in accordance with generally accepted
accounting principles.
(c) For other purposes and, notwithstanding subsections (a) and (b) of
this section 11.7, when used anywhere in this Agreement with explicit reference
to any of the federal securities laws or to the Proxy Statement or the
Registration Statement, the terms "material" and "materially" shall be construed
and understood in accordance with standards of materiality as judicially
determined under the federal securities laws.
(d) The term "Material Adverse Effect" wherever used in this Agreement
shall mean, with respect to a person, a material adverse effect on the business,
results of operations, financial condition or prospects of such person and its
subsidiaries taken as a whole or a material adverse effect on such person's
ability to consummate the transactions contemplated hereby on a timely basis;
provided, that, in determining whether a Material Adverse Effect has occurred,
there shall be excluded any effect on the referenced person the cause of which
is (i) any change in banking laws, rules or regulations of general applicability
or interpretations thereof by courts or governmental authorities, (ii) any
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change in generally accepted accounting principles or regulatory accounting
requirements applicable to banks or their holding companies generally, (iii) any
action or omission of PAHC or any of its subsidiaries taken with the prior
written consent of NBTB, or of NBTB or any of its subsidiaries taken with the
prior written consent of PAHC, or (iv) any changes in general economic
conditions affecting banks or their holding companies.
12.8. ADJUSTMENTS FOR CERTAIN EVENTS. Anything in this agreement to the
contrary notwithstanding, all prices per share, share amounts, per-share
amounts, and exchange ratios referred to in this Agreement (including without
limitation section 11.2(d) of this Agreement) shall be appropriately adjusted to
account for stock dividends, split-ups, mergers, recapitalizations,
combinations, conversions, exchanges of shares or the like, but not for normal
and recurring cash dividends declared or paid in a manner consistent with the
established practice of the payer.
12.9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
12.10. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
of the parties hereto with respect to their commitments to each other and their
undertakings vis-a-vis each other on the subject matter hereof. Any previous
agreements or understandings among the parties regarding the subject matter
hereof are merged into and superseded by this Agreement. Nothing in this
Agreement express or implied is intended or shall be construed to confer upon or
to give any person, other than NBTB, Newco, PAHC, and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
12.11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. None of the
representations, warranties, covenants, and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Stock Option
Agreement, the employment agreement described in section 4.8 hereof, and the
change-in-control agreements described in section 5.5 hereof, each of which
shall terminate in accordance with its terms), shall survive the Effective Time,
except for sections 9.6, 12.4, 12.6, and those other covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
12.12. SECTION HEADINGS. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
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12.13. NOTICES. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to NBTB:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Mr. Daryl R. Forsythe
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to PAHC or PA Bank:
Pioneer American Holding Company Corp.
41 North Main Street
Carbondale, Pennsylvania 18407
Attention: Mr. John W. Reuther
President and Chief Executive Officer
With a required copy to:
Lawrence R. Wiseman, Esq.
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103-6998
All such notices shall be deemed to have been given on the date
delivered, transmitted, or mailed in the manner provided above.
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12.14. CHOICE OF LAW AND VENUE. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Delaware,
without giving effect to the principles of conflict of law thereof, except that
the BCL (in the case of PAHC) shall govern with respect to the terms and
conditions of the Merger, the approval and effectiveness thereof, and the
authorization, cancellation, or issuance of the stock or options of PAHC with
respect thereto. The parties hereby designate the Chancery Court in New Castle
County, Delaware to be the proper jurisdiction and venue for any suit or action
arising out of this Agreement. Each of the parties consents to personal
jurisdiction in such venue for such a proceeding and agrees that it may be
served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of Delaware. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
12.15. KNOWLEDGE OF A PARTY. References in this Agreement to the
knowledge of a party shall mean the actual knowledge possessed by the present
executive officers of such party.
12.16. BINDING AGREEMENT. This Agreement shall be binding upon the
parties and their respective successors and assigns.
-----------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NBT BANCORP INC.
By: /S/ DARYL R. FORSYTHE
-----------------------------------
Daryl R. Forsythe
President and Chief Executive Officer
By: /S/ JOHN D. ROBERTS
----------------------------------
John D. Roberts
Senior Vice President and Secretary
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LEVON ACQUISITION COMPANY
By: /S/ DARYL R. FORSYTHE
-----------------------------------
Daryl R. Forsythe
President and Chief Executive Officer
By: /S/ JOHN D. ROBERTS
----------------------------------
John D. Roberts
Secretary
PIONEER AMERICAN HOLDING COMPANY CORP.
By: /S/ JOHN W. REUTHER
-----------------------------------
John W. Reuther
President and Chief Executive Officer
By: /S/ ANTOINETTE STICKER
-----------------------------------
Antoinette Sticker
Secretary
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)
State of New York )
) ss.
County of Chenango )
)
On this seventh day of December, 1999, before me personally appeared
Daryl R. Forsythe, to me known to be the President and Chief Executive Officer
of NBT Bancorp Inc., and John D. Roberts, to me known to be the Senior Vice
President and Secretary of NBT Bancorp Inc., and each acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes therein mentioned, and on oath each stated that he was
authorized to execute said instrument and that the seal affixed is the corporate
seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
/S/ DAVID R. THELEMAN
---------------------
Notary Public
DAVID R. THELEMAN
Notary Public, State of New York
Broome County, # 4940266
Commission Expires Aug. 8, 2000
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)
State of New York )
) ss.
County of Chenango )
)
On this seventh day of December, 1999, before me personally appeared
Daryl R. Forsythe, to me known to be the President and Chief Executive Officer
of Levon Acquisition Company, and John D. Roberts, to me known to be the
Secretary of Levon Acquisition Company, and each acknowledged said instrument to
be the free and voluntary act and deed of said corporation, for the uses and
purposes therein mentioned, and on oath each stated that he was authorized to
execute said instrument and that the seal affixed is the corporate seal of said
corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
/S/ DAVID R. THELEMAN
---------------------
Notary Public
DAVID R. THELEMAN
Notary Public, State of New York
Broome County, # 4940266
Commission Expires Aug. 8, 2000
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)
Commonwealth of Pennsylvania )
) ss.
County of Lackawanna )
)
On this seventh day of December, 1999, before me personally appeared
John W. Reuther, to me known to be the President and Chief Executive Officer of
Pioneer American Holding Company Corp., and Antoinette Sticker, to me known to
be the Secretary of Pioneer American Holding Company Corp., and each
acknowledged said instrument to be the free and voluntary act and deed of said
corporation, for the uses and purposes therein mentioned, and on oath each
stated that he was authorized to execute said instrument and that the seal
affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
/S/ LISA ANN BUCHINSKI
----------------------
Notary Public
Notarial Seal
Lisa Ann Buchinski, Notary Public
Carbondale, Lackawanna County
My Commission Expires Oct. 16, 2000
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The undersigned members of the Board of Directors of Pioneer American
Holding Company Corp. ("PAHC"), acknowledging that NBT Bancorp Inc. ("NBTB") has
relied upon the action heretofore taken by the board of directors in entering
into the Agreement, and has required the same as a prerequisite to NBTB's
execution of the Agreement, do individually and as a group agree, subject to
their fiduciary duties to shareholders, to support the Agreement and to
recommend its adoption by the other shareholders of PAHC.
The undersigned do hereby, individually and as a group, until the
Effective Time or termination of the Agreement, further agree to refrain from
soliciting or, subject to their fiduciary duties to shareholders, negotiating or
accepting any offer of merger, consolidation, or acquisition of any of the
shares or all or substantially all of the assets of PAHC or PA Bank, National
Association.
/S/ JOSEPH G. NASSER /S/ MICHAEL M. MURPHY
- ------------------------ ---------------------------
/S/ R. CHOJNOWSKI /S/ JOHN W. WALSKI
- ------------------------ ---------------------------
/S/ ELDORE SEBASTIANELLI /S/ GENE E. GOLDENZIEL
- ------------------------ ---------------------------
/S/ JOHN W. REUTHER /S/ MARGARET O'CONNOR-FLETCHER
- ------------------------ ------------------------------
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SCHEDULE 1.10
Richard Chojnowski
Gene E. Goldenziel
Michael M. Murphy
Joseph G. Nasser
William K. Nasser, Sr.
William K. Nasser, Jr.
Margaret L. O'Connor-Fletcher
John W. Reuther
Eldore Sebastianelli
John W. Walski
<PAGE>
APPENDIX B
FAIRNESS OPINION OF MCCONNELL, BUDD & DOWNES, INC.
[TO BE FILED BY AMENDMENT]
<PAGE>
APPENDIX C
FAIRNESS OPINION OF DANIELSON ASSOCIATES INC.
[TO BE FILED BY AMENDMENT]
<PAGE>
APPENDIX D
SECTIONS 1571 THROUGH 1580 OF THE PENNSYLVANIA BUSINESS CORPORATION LAW,
REGARDING DISSENTERS' RIGHTS
PENNSYLVANIA Business Corporation Law
Subchapter D. Dissenters Rights
1571 APPLICATION AND EFFECT OF SUBCHAPTER. -- (a) General rule. Except as
otherwise provided in subsection (b), any shareholder of a business corporation
shall have the right to dissent from, and to obtain payment of the fair value of
his shares in the event of, any corporate action, or to otherwise obtain fair
value for his shares, where this part expressly provides that a shareholder
shall have the rights and remedies provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special treatment).
Section 1930 (relating to dissenters rights). Section 1931(d) (relating to
dissenters rights in share exchanges). Section 1932(c) (relating to
dissenters rights in asset transfers). Section 1952(d) (relating to
dissenters rights in division). Section 1962(c) (relating to dissenters
rights in conversion). Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on transfer
of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement). Section 2704(c)
(relating to dissenters rights upon election). Section 2705(d) (relating to
dissenters rights upon renewal of election).
Section 2907(a) (relating to proceedings to terminate breach of qualifying
conditions). Section 7104(b)(3) (relating to procedure).
(b)Exceptions. -- (I) Except as otherwise provided in paragraph (2), the
holders of the shares of any class or series of shares that, at the record date
fixed to determine the shareholders entitled to notice of and to vote at the
meeting at which a plan specified in any of section 1930, 1931(d), 1932(c) or
1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of the fair value of any such shares
under this subchapter.
<PAGE>
(2) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in the case
of:
(i) Shares converted by a plan if the shares are not converted solely into
shares of the acquiring, surviving, new or other corporation or solely into such
shares and money in lieu of fractional shares.
(ii) Shares of any preferred or special class unless the articles, the
plan or the terms of the transaction entitle all shareholders of the class to
vote thereon and require for the adoption of the plan or the effectuation of the
transaction the affirmative vote of a majority of the votes cast by all
shareholders of the class.
(iii)Shares entitled to dissenters rights under section 1906(c) (relating
to dissenters rights upon special treatment).
(3) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares, property
or assets of another corporation by the issuance of shares, obligations or
otherwise, with or without assuming the liabilities of the other corporation and
with or without the intervention of another corporation or other person, shall
not be entitled to the rights and remedies of dissenting shareholders provided
in this subchapter regardless of the fact, if it be the case, that the
acquisition was accomplished by the issuance of voting shares of the corporation
to be outstanding immediately after the acquisition sufficient to elect a
majority or more of the directors of the corporation.
(c) Grant of optional dissenters rights. -- The bylaws or a resolution of
the board of directors may direct that all or a part of the shareholders shall
have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholder to dissenters
rights.
(d) Notice of dissenters rights. -- Unless otherwise provided by statute, if
a proposed corporate action that would give rise to dissenters rights under this
subpart is submitted to a vote at a meeting of shareholders, there shall be
included in or enclosed with the notice of meeting:
(1) A statement of the proposed action and a statement that the shareholders
have a right to dissent and obtain payment of the fair value of their shares by
complying with the terms of this subchapter, and
(2) A copy of this subchapter.
(e) Other statutes. -- The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this part that
makes reference to this subchapter for the purpose of granting dissenters
rights.
(f) Certain provisions of articles ineffective. -- This subchapter may not
be relaxed by any provision of the articles.
(g) Cross references. -- See sections 1105 (relating to restriction on
equitable relief), 1904 (relating to de facto transaction doctrine abolished)
and 2512 (relating to dissenters rights procedure).
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1572 DEFINITIONS. -- The following words and phrases when used in this
subchapter shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation, division,
conversion or otherwise of that issuer. A plan of division may designate which
of the resulting corporations is the successor corporation for the purposes of
this subchapter. The successor corporation in a division shall have sole
responsibility for payments to dissenters and other liabilities under this
subchapter except as otherwise provided in the plan of division.
"Dissenter." A shareholder or beneficial owner who is entitled to and does
assert dissenters rights under this subchapter and who has performed every act
required up to the time involved for the assertion of those rights.
"Fair value." The fair value of shares immediately before the effectuation
of the corporate action to which the dissenter objects, taking into account all
relevant factors, but excluding any appreciation or depreciation in anticipation
of the corporate action.
"Interest." Interest from the effective date of the corporate action until
the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors, including the average
rate currently paid by the corporation on its principal bank loans.
1573 RECORD AND BENEFICIAL HOLDERS AND OWNERS. -- (a) Record holders of
shares. -- A record holder of shares of a business corporation may assert
dissenters rights as to fewer than all of the shares registered in his name only
if he dissents with respect to all the shares of the same class or series
beneficially owned by any one person and discloses the name and address of the
person or persons on whose behalf he dissents. In that event, his rights shall
be determined as if the shares as to which he has dissented and his other shares
were registered in the names of different shareholders.
(b) Beneficial owners of shares. -- A beneficial owner of shares of a
business corporation who is not the record holder may assert dissenters rights
with respect to shares held on his behalf and shall be treated as a dissenting
shareholder under the terms of this subchapter if he submits to the corporation
not later than the time of the assertion of dissenters rights a written consent
of the record holder. A beneficial owner may not dissent with respect to some
but less than all shares of the same class or series owned by the owner, whether
or not the shares so owned by him are registered in his name.
1574 NOTICE OF ON TO DISSENT. -- If the proposed corporate action is
submitted to a vote at a meeting of shareholders of a business corporation, any
person who wishes to dissent and obtain payment of the fair value of his shares
must file with the corporation, prior to the vote, a written notice of intention
to demand that he be paid the fair value for his shares if the proposed action
is effectuated, must effect no change in the beneficial ownership of his shares
from the date of such filing continuously through the effective date of the
proposed action and must refrain from voting his shares in approval of such
action. A dissenter who fails in any respect shall not acquire any right to
payment of the fair value of his shares under this subchapter. Neither a proxy
nor a vote against the proposed corporate action shall constitute the written
notice required by this section.
1575 NOTICE TO DEMAND PAYMENT. -- (a) General rule. -- If the proposed
corporate action is approved by the required vote at a meeting of shareholders
of a business corporation, the corporation shall mail a further notice to all
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dissenters who gave due notice of intention to demand payment of the fair value
of their shares and who refrained from voting in favor of the proposed action.
If the proposed corporate action is to be taken without a vote of shareholders,
the corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of the
plan or other corporate action. In either case, the notice shall:
(1) State where and when a demand for payment must be sent and certificates
for certificated shares must be deposited in order to obtain payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the shares.
(4) Be accompanied by a copy of this subchapter.
(b) Time for receipt of demand for payment. -- The time set for receipt of
the demand and deposit of certificated shares shall be not less than 30 days
from the mailing of the notice.
1576 FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC. -- (a) Effect of
failure of shareholder to act. -- A shareholder who fails to timely demand
payment, or fails (in the case of certificated shares) to timely deposit
certificates, as required by a notice pursuant to section 1575 (relating to
notice to demand payment) shall not have any right under this subchapter to
receive payment of the fair value of his shares.
(b) Restriction on uncertificated shares. -- If the shares are not
represented by certificates, the business corporation may restrict their
transfer from the time of receipt of demand for payment until effectuation of
the proposed corporate action or the release of restrictions under the terms of
section 1577(a) (relating to failure to effectuate corporate action).
(c) Rights retained by shareholder. -- The dissenter shall retain all other
rights of a shareholder until those rights are modified by effectuation of the
proposed corporate action.
1577 RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES. -- (a) Failure to
effectuate corporate reaction. -- Within 60 days after the date set for
demanding payment and depositing certificates, if the business corporation has
not effectuated the proposed corporate action, it shall return any certificates
that have been deposited and release uncertificated shares from any transfer
restrictions imposed by reason of the demand for payment.
(b) Renewal of notice to demand payment. -- When uncertificated shares have
been released from transfer restrictions and deposited certificates have been
returned, the corporation may at any later time send a new notice conforming to
the requirements of section 1575 (relating to notice to demand payment), with
like effect.
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(c) Payment of fair value of shares. -- Promptly after effectuation of the
proposed corporate action, or upon timely receipt of demand for payment if the
corporate action has already been effectuated, the corporation shall either
remit to dissenters who have made demand and (if their shares are certificated)
have deposited their certificates the amount that the corporation estimates to
be the fair value of the shares, or give written notice that no remittance under
this section will be made. The remittance or notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of the
shares held or owned by the dissenter for a fiscal year ending not more than 16
months before the date of remittance or notice together with the latest
available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the
shares.
(3) A notice of the right of the dissenter to demand payment or supplemental
payment, as the case may be accompanied by a copy of this subchapter.
(d) Failure to make payment. -- If the corporation does not remit the amount
of its estimate of the fair value of the shares as provided by subsection (c),
it shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of the
demand for payment. The corporation may make a notation on any such certificate
or on the records of the corporation relating to any such uncertificated shares
that such demand has been made. If shares with respect to which notation has
been so made shall be transferred, each new certificate issued therefor or the
records relating to any transferred uncertificated shares shall bear a similar
notation, together with the name of the original dissenting holder or owner of
such shares. A transferee of such shares shall not acquire by such transfer any
rights in the corporation other than those that the original dissenter had after
making demand for payment of their fair value.
1578 ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES. -- (a) General rule. --
If the business corporation gives notice of its estimate of the fair value of
the shares, without remitting such amount, or remits payment of its estimate of
the fair value of a dissenter's shares as permitted by section 1577(c) (relating
to payment of fair value of shares) and the dissenter believes that the amount
stated or remitted is less than the fair value of his shares, he may send to the
corporation his own estimate of the fair value of the shares, which shall be
deemed a demand for payment of the amount or the deficiency.
(b) Effect of failure to file estimate. -- Where the dissenter does not file
his own estimate under subsection (a) within 30 days after the mailing by the
corporation of its remittance or notice, the dissenter shall be entitled to no
more than the amount stated in the notice or remitted to him by the corporation.
1579 VALUATION PROCEEDINGS GENERALLY. -- (a) General rule. --Within 60 days
after the latest of:
(1) Effectuation of the proposed corporate action;
(2)Timely receipt of any demands for payment under section 1575 (relating to
notice to demand payment); or
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(3) Timely receipt of any estimates pursuant to section 1578 (relating to
estimate by dissenter of fair value of shares);
If any demands for payment remain unsettled, the business corporation may file
in court an application for relief requesting that the fair value of the shares
be determined by the court.
(b) Mandatory joinder of dissenters. -- All dissenters, wherever residing,
whose demands have not been settled shall be made parties to the proceeding as
in an action against their shares. A copy of the application shall be served on
each such dissenter. If a dissenter is a nonresident, the copy may be served on
him in the manner provided or prescribed by or pursuant to 42 Pa.C.S. Ch. 53
(relating to bases of jurisdiction and interstate and international procedure).
(c) Jurisdiction of the court. -- The jurisdiction of the court shall be
plenary and exclusive. The court may appoint an appraiser to receive evidence
and recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or in
any amendment thereof.
(d) Measure of recovery. -- Each dissenter who is made a party shall be
entitled to recover the amount by which the fair value of his shares is found to
exceed the amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application. -- If the
corporation fails to file an application as provided in subsection (a), any
dissenter who made a demand and who has not already settled his claim against
the corporation may do so in the name of the corporation any time within 30 days
after the expiration of the 60-day period. If a dissenter does not file an
application within the 30-day period, each dissenter entitled to file an
application shall be paid the corporation's estimate of the fair value of the
shares and no more, and may bring an action to recover any amount not previously
remitted.
1580 COSTS AND EXPENSES OF VALUATION PROCEEDINGS. -- (a) General rule. --
The costs and expenses of any proceeding under section 1579 (relating to
valuation proceedings generally), including the reasonable compensation and
expenses of the appraiser appointed by the court, shall be determined by the
court and assessed against the business corporation except that any part of the
costs and expenses may be apportioned and assessed as the court deems
appropriate against all or some of the dissenters who are parties and whose
action in demanding supplemental payment under section 1578 (relating to
estimate by dissenter of fair value of shares) the court finds to be dilatory,
obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith
appears. -- Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court deems appropriate against the corporation
and in favor of any or all dissenters if the corporation failed to comply
substantially with the requirements of this subchapter and may be against either
the corporation or a dissenter, in favor of any other party, if the court finds
that the party against whom the fees and expenses are assessed acted in bad
faith or in a dilatory, obdurate, arbitrary or vexatious manner in respect to
the rights provided by this subchapter.
(c) Award of fees for benefits to other dissenters. -- If the court finds
that the services of counsel for any dissenter were of substantial benefit to
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other dissenters similarly situated and should not be against the corporation,
it may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
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<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
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<PAGE>
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Section 15 or otherwise shall be on the Corporation.
Section 4. The rights to indemnification and to the advancement of
expenses conferred in this Article VI shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Corporation's Certificate of Incorporation, By-Laws, agreement, vote of
stockholders or disinterested Directors or otherwise.
Section 5. The Corporation may maintain insurance, at its expense, to
protect itself and any Director, officer, employee or agent of the Corporation
or of another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
Section 6. The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation, or any
person serving at the request of the Corporation as an officer, employee or
agent of another entity, to the fullest extent of the provisions of this Section
with respect to the indemnification and advancement of expenses of Directors and
officers of the Corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS.
(a)The following exhibits are filed as part of this Registration Statement or
incorporated herein by reference:
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger by and between NBT Bancorp
Inc. and Pioneer American Holding Company Corp., dated as
of December 7, 1999, (included as Appendix A in the Joint
Proxy Statement/Prospectus included in this Registration
Statement; Exhibits I, II, VI, and IX incorporated by
reference to Exhibits 2.3, 2.4, 2.5 and 2.6 of NBT's
Schedule 13D filed on December 16, 1999).
5 Opinion of Duane, Morris & Heckscher LLP as to the
legality of the securities.*
8 Opinion of Blank Rome Comisky & McCauley LLP as to certain
tax matters. [To be filed by amendment]
10.1 Stock Option Agreement, dated as of December 7, 1999, by
and between NBT and Pioneer American (incorporated by
reference to Exhibit 2.3 of NBT's Schedule 13D filed
December 16, 1999)
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10.2 Form of Employment Agreement between NBT Bancorp Inc. and
John W. Reuther (incorporated by reference to Exhibit
2.4 of NBT's Schedule 13D filed December 16, 1999)
10.3 Form of Change-in-Control Agreement between NBT Bancorp
Inc. and John W. Reuther, Patricia A. Cobb and James E.
Jackson (incorporated by reference to Exhibit 2.5 of NBT's
Schedule 13D filed December 16, 1999)
10.4 Shareholder Voting Agreement between NBT Bancorp Inc. and
Richard Chojnowski, Gene E. Goldenziel, Michael M.
Murphy, Joseph G. Nasser, William K. Nasser, Sr., William
K. Nasser, Jr., Margaret L. O'Connor-Fletcher, John
W. Reuther, Eldore Sebastianelli, and John W. Walski
(incorporated by reference to Exhibit 2.6 of NBT's
Schedule 13D filed December 16, 1999)
13.1 Pioneer American Holding Company Corp. Annual Report on
SEC Form 10-K for the year ended December 31, 1999
(incorporated by reference to Pioneer American Holding
Company Corp.'s Form 10-K for the year ended December
31, 1999, SEC File No. 0-14506)
23.1 Consent of KPMG LLP, independent auditors for NBT Bancorp
Inc.*
23.2 Consent of KPMG LLP, independent auditors for Pioneer
American Holding Company Corp.*
23.3 Consent of Danielson Associates Inc. [To be filed by
amendment]
23.4 Consent of McConnell, Budd & Downes, Inc. [To be filed by
amendment]
23.5 Consent of Duane, Morris & Heckscher LLP (included in
Exhibit 5).
23.6 Consent of Blank Rome Comisky & McCauley LLP (included in
Exhibit 8).
23.7 Consent of Joseph G. Nasser *
23.8 Consent of Gene E. Goldenziel *
23.9 Consent of Richard Chojnowski *
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 -- [To be filed by amendment]).
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99.2 Opinion of Danielson Associates Inc. as to the fairness of
the transaction to stockholders of Pioneer American
(attached as Appendix C to the Joint Proxy Statement/
Prospectus included in this Registration Statement -- [To
be filed by amendment]).
- ---------------
* Filed herewith.
(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) of this Form.
(c) The fairness opinion of McConnell, Budd & Downes, Inc. is attached
as Appendix B to the Joint Proxy Statement/Prospectus included in this
Registration Statement. The fairness opinion of Danielson Associates
Inc. is attached as Appendix C to the Joint Proxy Statement/Prospectus
included in this Registration Statement.
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.
(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
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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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Norwich, New York on
this 23rd day of February, 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 February 23, 2000
- ---------------------- and Director (Principal Executive
Daryl R. Forsythe Officer)
/S/ MICHAEL J. CHEWENS Executive Vice President, February 23, 2000
- ----------------------
Michael J. Chewens Chief Financial Officer, and Treasurer
of NBT and NBT Bank (Principal
Financial and Accounting Officer)
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<PAGE>
/S/ EVERETTE A. GILMOUR Chairman of the Board of Directors February 23, 2000
- -----------------------
Everett A. Gilmour
/S/ J. PETER CHAPLIN Director February 23, 2000
- -----------------------
J. Peter Chaplin
/S/ PETER B. GREGORY Director February 23, 2000
- -----------------------
Peter B. Gregory
Director
- -----------------------------
Andrew S. Kowalczyk, Jr.
/S/ DAN B. MARSHMAN Director February 23, 2000
- --------------------
Dan B. Marshman
/S/ JOHN C. MITCHELL Director February 23, 2000
- ------------------------
John C. Mitchell
Director
- ---------------------
William L. Owens
/S/ PAUL O. STILLMAN Director February 23, 2000
- ------------------------
Paul O. Stillman
</TABLE>
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger by and between NBT Bancorp
Inc. and Pioneer American Holding Company Corp. dated as
of December 7, 1999, (included as Appendix A in the Joint
Proxy Statement/Prospectus included in this Registration
Statement; Exhibits I, II, VI, and IX incorporated by
reference to Exhibits 2.3, 2.4, 2.5 and 2.6 of NBT's
Schedule 13D filed on December 16, 1999).
5 Opinion of Duane, Morris & Heckscher LLP as to the
legality of the securities.*
8 Opinion of Blank Rome Comisky & McCauley LLP as to certain
tax matters. [To be filed by amendment]
10.1 Stock Option Agreement, dated as of December 7, 1999, by
and between NBT and Pioneer American (incorporated by
reference to Exhibit 2.3 of NBT's Schedule 13D filed
December 16, 1999).
10.2 Form of Employment Agreement between NBT Bancorp Inc. and
John W. Reuther (incorporated by reference to Exhibit
2.4 of NBT's Schedule 13D filed December 16, 1999)
10.3 Form of Change-in-Control Agreement between NBT Bancorp
Inc. and John W. Reuther, Patricia A. Cobb and James E.
Jackson (incorporated by reference to Exhibit 2.5 of NBT's
Schedule 13D filed December 16, 1999)
10.4 Shareholder Voting Agreement between NBT Bancorp Inc. and
Richard Chojnowski, Gene E. Goldenziel, Michael M.
Murphy, Joseph G. Nasser, William K. Nasser, Sr., William
K. Nasser, Jr., Margaret L. O'Connor-Fletcher, John
W. Reuther, Eldore Sebastianelli, and John W. Walski
(incorporated by reference to Exhibit 2.6 of NBT's
Schedule 13D filed December 16, 1999)
13.1 Pioneer American Holding Company Corp. Annual Report on
SEC Form 10-K for the year ended December 31, 1999
(incorporated by reference to Pioneer American Holding
Company Corp.'s Form 10-K for the year ended December
31, 1999, SEC File No. 0-22092)
23.1 Consent of KPMG LLP, independent auditors for NBT Bancorp
Inc.*
23.2 Consent of KPMG LLP, independent auditors for Pioneer
American Holding Company Corp.*
23.3 Consent of Danielson Associates Inc. [To be filed by
amendment]
II-8
<PAGE>
23.4 Consent of McConnell, Budd & Downes, Inc. [To be filed by
amendment]
23.5 Consent of Duane, Morris & Heckscher LLP (included in
Exhibit 5).
23.6 Consent of Blank Rome Comisky & McCauley LLP (included in
Exhibit 8).
23.7 Consent of Joseph G. Nasser *
23.8 Consent of Gene E. Goldenziel *
23.9 Consent of Richard Chojnowski *
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 -- [To be filed by amendment]).
99.2 Opinion of Danielson Associates Inc. as to the fairness of
the transaction to stockholders of Pioneer American
(attached as Appendix C to the Joint Proxy Statement/
Prospectus included in this Registration Statement -- [To
be filed by amendment]).
- ---------------------
* Filed herewith.
II-9
<PAGE>
EXHIBIT 5
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006-1608
(202) 776-7800
February 23, 2000
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Gentlemen:
We have acted as counsel to NBT Bancorp Inc., a Delaware
corporation ("NBT") in connection with the Agreement and Plan of Merger dated as
of December 7, 1999, (the "Plan of Merger") between NBT and Pioneer American
Holding Company Corp., a Pennsylvania corporation ("Pioneer American"), whereby
Pioneer American will be merged into NBT, with NBT being the surviving
corporation (the "Merger"). At the Effective Time of the Merger, the outstanding
shares of Pioneer American common stock, par value $1.00 per share ("Pioneer
American Common Stock"), will be canceled and immediately converted into the
right of holders of Pioneer American Common Stock to receive, in exchange for
each share of Pioneer American Common Stock, 1.805 shares of NBT common stock,
$.01 par value per share, ( referred to herein as "NBT Common Stock"), up to an
aggregate of approximately 5,200,000 shares (the "Shares") of NBT Common Stock
for all of the outstanding shares of Pioneer American Common Stock.
We are also acting as counsel to NBT in connection with the
Registration Statement on Form S-4 (the "Registration Statement") to be filed by
NBT with the Securities and Exchange Commission for the purpose of registering
under the Securities Act of 1933, as amended, the Shares into which outstanding
shares of Pioneer American Common Stock will be converted upon effectiveness of
the Merger. This opinion is being furnished for the purpose of being filed as an
exhibit to the Registration Statement.
In connection with this opinion, we have examined, among other
things:
(1) an executed copy of the Plan of Merger;
(2) a copy certified to our satisfaction of the Certificate
of Incorporation of NBT as in effect on the date
hereof;
(3) copies certified to our satisfaction of resolutions
adopted by the Board of Directors of NBT on
December 7, 1999, including resolutions approving the
Plan of Merger and the issuance of the Shares; and
(4) such other documents, corporate proceedings, and statutes
as we considered necessary to enable us to furnish
this opinion.
<PAGE>
We have assumed for the purpose of this opinion that:
(1) the Plan of Merger has been duly and validly authorized,
executed, and delivered by Pioneer American, and such
authorization remains fully effective and has not been
revised, superseded or rescinded as of the date of this
opinion; and
(2) the Merger will be consummated in accordance with the
terms of the Plan of Merger.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. We have assumed that the certifications and representations dated
earlier than the date hereof on which we have expressed reliance herein continue
to remain accurate, insofar as material to our opinions, from such earlier date
through the date hereof.
Based upon the foregoing and limited in all respects to matters of
Delaware law, we are of the opinion that the Shares to be issued by NBT as
described in the Registration Statement, when and to the extent issued in
accordance with the Plan of Merger, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us under the caption "Legal
Matters" in the Joint Proxy Statement/Prospectus forming a part of the
Registration Statement.
Very truly yours,
/s/ DUANE, MORRIS & HECKSCHER LLP
<PAGE>
EXHIBIT 8
OPINION OF BLANK ROME COMISKY & MCCAULEY LLP
[To be filed by amendment]
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
NBT Bancorp Inc.:
We consent to incorporation by reference in the registration statement on
Form S-4 related to the registration of shares for the merger between NBT
Bancorp Inc. and Pioneer American Holding Company Corp., filed by NBT Bancorp
Inc. under the Securities Act of 1933 of our audit report dated January 22,
1999, with respect to the consolidated balance sheets of NBT Bancorp Inc. and
subsidiary as of December 31, 1998 and 1997, and the related consolidated
statements of income, stockholders' equity, cash flows and comprehensive income
for each of the years in the three-year period ended December 31, 1998 which
report appears in the December 31, 1998 annual report on Form 10-K of NBT
Bancorp Inc., incorporated by reference herein, and to the reference to our firm
under the heading "Experts" in the Prospectus.
/s/ KPMG LLP
KPMG LLP
Syracuse, New York
February 22, 2000
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Pioneer American Holding Company Corp.
We consent to incorporation by reference in the registration statement
on Form S-4 of our audit report dated January 25, 1999, relating to the
consolidated balance sheets of Pioneer American Holding Company Corp. and
subsidiary as of December 31, 1998 and 1997, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1998 which report
has been incorporated by reference in the December 31, 1998 annual report on
Form 10-K of Pioneer American Holding Company Corp., incorporated by reference
herein, and to the reference to our firm under the heading "Experts" in the
Prospectus.
/s/ KPMG LLP
KPMG LLP
Philadelphia, Pennsylvania
February 21, 2000
EXHIBIT 23.3
[To be filed by amendment]
EXHIBIT 23.4
CONSENT OF FINANCIAL ADVISOR
[To be filed by amendment]
EXHIBIT 23.7
CONSENT OF JOSEPH G. NASSER
The undersigned hereby consents, pursuant to Rule 438 of the Securities
Act of 1933, as amended, to the reference to him in the Joint Proxy Statement/
Prospectus of NBT Bancorp Inc. and Pioneer American Holding Company Corp., which
is part of the Registration Statement on Form S-4 of NBT Bancorp Inc. under the
circumstances described therein.
/s/ Joseph G. Nasser
February 22, 2000
EXHIBIT 23.8
CONSENT OF GENE E. GOLDENZIEL
The undersigned hereby consents, pursuant to Rule 438 of the Securities
Act of 1933, as amended, to the reference to him in the Joint Proxy
Statement/Prospectus of NBT Bancorp Inc. and Pioneer American Holding Company
Corp., which is part of the Registration Statement on Form S-4 of NBT Bancorp
Inc. under the circumstances described therein.
/s/ Gene E. Goldenziel
February 22, 2000
EXHIBIT 23.9
CONSENT OF RICHARD CHOJNOWSKI
The undersigned hereby consents, pursuant to Rule 438 of the Securities
Act of 1933, as amended, to the reference to him in the Joint Proxy
Statement/Prospectus of NBT Bancorp Inc. and Pioneer American Holding Company
Corp., which is part of the Registration Statement on Form S-4 of NBT Bancorp
Inc. under the circumstances described therein.
/s/ Richard Chojnowski
February 22, 2000
