AGREEMENT AND PLAN OF MERGER
AMONG
NBT BANCORP INC.
AND
LAKE ARIEL BANCORP, INC.
August 16, 1999, as amended December 13, 1999 and December 27, 1999
TABLE OF CONTENTS
PAGE
1.
Combination.....................................................................
.........................1
1.1 Merger of NBTB and
LABN.........................................................................1
1.2 Effect of the
Merger..........................................................................
..1
1.3 Consideration for
Merger........................................................................3
1.4 No Fractional
Shares..........................................................................
..4
1.5 Dividends;
Interest........................................................................
.....4
1.6 Designation of Exchange
Agent...................................................................4
1.7 Notice of
Exchange........................................................................
......5
1.8 Acts to Carry Out This Merger
Plan..............................................................5
1.9 Treatment of Stock
Options......................................................................5
1.10 Stock Option
Agreement.......................................................................
...6
1.11 Executive Officers and Directors of
LABN........................................................6
1.12 Employee
Benefits........................................................................
.......7
2. Effective
Time............................................................................
...............7
2.1 LABN Shareholder
Approval.......................................................................8
2.2 NBTB Shareholder
Approval.......................................................................8
2.3 Federal Reserve
Approval........................................................................
8
2.4 Pennsylvania Department of Banking
Approval.....................................................8
2.5 Other Regulatory
Approvals......................................................................8
2.6 Expiration of
Stays...........................................................................
..8
2.7 Mutual
Agreement.......................................................................
.........8
3. Conditions Precedent to Performance of Obligations of the
Parties........................................8
3.1 Regulatory
Approvals.......................................................................
.....8
3.2 Registration
Statement.......................................................................
...8
3.3 Approval by Shareholders of
LABN................................................................9
3.4 Approval by Shareholders of
NBTB................................................................9
3.5 Federal Income
Taxation........................................................................
.9
3.6 Adverse
Legislation.....................................................................
........9
3.7 Absence of
Litigation......................................................................
.....9
4. Conditions Precedent to Performance of the Obligations of
NBTB ..........................................9
4.1 Representations and Warranties; Performance of
Obligations......................................9
4.2 Opinion of LABN
Counsel.........................................................................
9
4.3 Opinion of LABN Litigation
Counsel.............................................................10
4.4 No Adverse
Developments....................................................................
....10
4.5 Consolidated Net
Worth.........................................................................10
4.6 Loan Loss
Reserve.........................................................................
.....10
4.7 CRA
Rating..........................................................................
...........10
4.8 Employment
Agreement.......................................................................
....10
4.9
Releases........................................................................
...............10
4.10 Accounting
Treatment.......................................................................
....10
4.11 Affiliates'
Agreements......................................................................
...10
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5. Conditions Precedent to Performance of Obligations of
LABN..............................................11
5.1 Representations and Warranties; Performance of
Obligations.....................................11
5.2 Opinion of NBTB
Counsel........................................................................1
1
5.3 No Adverse
Developments....................................................................
....11
5.4 Status of NBTB Common
Stock....................................................................11
5.5 Change-in-Control
Agreements...................................................................11
6. Representations and Warranties of
LABN..................................................................11
6.1 Organization, Powers, and
Qualification........................................................11
6.2 Execution and Performance of
Agreement.........................................................12
6.3 Absence of
Violations......................................................................
....12
6.4 Compliance with
Agreements.....................................................................1
2
6.5 Binding
Obligations.....................................................................
.......12
6.6 Absence of Default; Due
Authorization..........................................................13
6.7 Compliance with BHC Act; Certain Banking Regulatory
Matters....................................13
6.8
Subsidiaries....................................................................
...............14
6.9 Capital
Structure.......................................................................
.......15
6.10 Articles of Incorporation, Bylaws, and Minute
Books............................................16
6.11 Books and
Records.........................................................................
.....16
6.12 Regulatory Approvals and Filings, Contracts, Commitments,
etc..................................16
6.13 Financial
Statements......................................................................
.....17
6.14 Call Reports; Bank Holding Company
Reports.....................................................17
6.15 Absence of Undisclosed
Liabilities.............................................................18
6.16 Absence of Certain
Developments................................................................18
6.17 Reserve for Possible Credit
Losses.............................................................18
6.18 Tax
Matters.........................................................................
...........19
6.19 Consolidated Net
Worth.........................................................................20
6.20
Examinations....................................................................
...............20
6.21
Reports.........................................................................
...............20
6.22 FIRA Compliance and Other Transactions with
Affiliates.........................................20
6.23 SEC Registered
Securities......................................................................
20
6.24 Legal
Proceedings.....................................................................
.........20
6.25 Absence of Governmental
Proceedings............................................................20
6.26 Federal Deposit
Insurance......................................................................2
1
6.27 Other
Insurance.......................................................................
.........21
6.28 Labor
Matters.........................................................................
.........21
6.29 Employee Benefit
Plans.........................................................................21
6.30
Compensation....................................................................
...............22
6.31 Fiduciary
Activities......................................................................
.....22
6.32 Environmental
Liability.......................................................................
.23
6.33 Intangible
Property........................................................................
....23
6.34 Real and Personal
Property.....................................................................24
6.35 Loans, Leases, and
Discounts...................................................................24
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6.36 Material
Contracts.......................................................................
......24
6.37 Employment and Severance
Arrangements..........................................................24
6.38 Material Contract
Defaults.....................................................................25
6.39 Capital
Expenditures....................................................................
.......25
6.40 Repurchase
Agreements......................................................................
....25
6.41 Internal Controls; Year 2000
Problem...........................................................25
6.42
Dividends.......................................................................
...............25
6.43 Brokers and
Advisers........................................................................
...25
6.44 Interest Rate Risk Management
Instruments......................................................25
6.45 Accounting
Treatment.......................................................................
....26
6.46 COBRA
Matters.........................................................................
.........26
6.47
Disclosure......................................................................
...............26
6.48 Regulatory and Other
Approvals.................................................................26
7. Covenants of
LABN............................................................................
...........26
7.1 Rights of
Access..........................................................................
.....26
7.2 Monthly and Quarterly Financial Statements; Minutes of
Meetings
and Other
Materials...................................................................27
7.3 Extraordinary
Transactions....................................................................
.27
7.4 Preservation of
Business.......................................................................2
8
7.5 Comfort
Letter..........................................................................
.......28
7.6 Affiliates'
Agreements......................................................................
...28
7.7 Pooling
Treatment.......................................................................
.......29
7.8 Shareholders'
Meeting.........................................................................
.29
7.9 Dividend
Coordination....................................................................
......29
7.10 Inconsistent
Activities......................................................................
..29
7.11 COBRA
Obligations.....................................................................
.........30
7.12 Updated
Schedules.......................................................................
.......30
7.13 Subsequent
Events..........................................................................
....30
8. Representations and Warranties of
NBTB..................................................................30
8.1 Organization, Powers, and
Qualification........................................................30
8.2 Execution and Performance of
Agreement.........................................................30
8.3 Binding Obligations; Due
Authorization.........................................................31
8.4 Absence of
Default.........................................................................
....31
8.5 Capital
Structure.......................................................................
.......31
8.6 Books and
Records.........................................................................
.....31
8.7 Financial
Statements......................................................................
.....32
8.8 Nasdaq
Reporting.......................................................................
........32
8.9 Absence of Certain
Developments................................................................32
8.10 Brokers and
Advisers........................................................................
...32
8.11
Disclosure......................................................................
...............32
8.12 Regulatory and Other
Approvals.................................................................32
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9. Covenants of
NBTB............................................................................
...........33
9.1 Rights of
Access..........................................................................
.....33
9.2 Securities
Reports.........................................................................
....33
9.3 Shareholders'
Meeting.........................................................................
.33
9.4 Nasdaq
Approval........................................................................
........33
9.5
Options.........................................................................
...............33
9.6 Indemnification of Directors and
Officers......................................................33
9.7 Subsequent
Events..........................................................................
....34
9.8 Registration of Shares Subject to
Option.......................................................34
10.
Closing.........................................................................
........................34
10.1 Place and Time of
Closing......................................................................34
10.2 Events to Take Place at
Closing................................................................34
11. Termination, Damages for Breach, Waiver, and
Amendment..................................................34
11.1 Termination by Reason of Lapse of
Time.........................................................34
11.2 Grounds for
Termination.....................................................................
...34
11.3 Effect of
Termination.....................................................................
.....37
11.4 Waiver of Terms or
Conditions..................................................................37
11.5
Amendment.......................................................................
...............37
12. General
Provisions......................................................................
................38
12.1 Allocation of Costs and
Expenses...............................................................38
12.2 Mutual
Cooperation.....................................................................
........38
12.3 Form of Public
Disclosures.....................................................................
38
12.4
Confidentiality.................................................................
...............38
12.5 Claims of
Brokers.........................................................................
.....38
12.6 Information for Applications and Registration
Statement........................................39
12.7 Standard of Materiality and of Material Adverse
Effect.........................................39
12.8 Adjustments for Certain
Events.................................................................40
12.9
Counterparts....................................................................
...............40
12.10 Entire
Agreement.......................................................................
........40
12.11 Survival of Representations, Warranties, and
Covenants.........................................40
12.12 Section
Headings........................................................................
.......40
12.13
Notices.........................................................................
...............41
12.14 Choice of Law and
Venue........................................................................41
12.15 Knowledge of a
Party...........................................................................
42
12.16 Binding
Agreement.......................................................................
.......42
A-iv
AGREEMENT AND PLAN OF MERGER
AS AMENDED
THIS AGREEMENT AND PLAN OF MERGER made as of the sixteenth day of
August, 1999, as amended as of the thirteenth day of December, 1999, and further
amended as of the twenty-seventh day of December, 1999, among NBT BANCORP INC.
("NBTB"), a Delaware corporation having its principal office in Norwich, New
York and LAKE ARIEL BANCORP, INC. ("LABN"), a Pennsylvania corporation having
its principal office in Lake Ariel, Pennsylvania
W I T N E S S E T H T H A T:
WHEREAS, NBTB and LABN are bank holding companies which desire to
affiliate with each other through the merger of LABN with and into NBTB, with
NBTB to be the surviving corporation (the "Merger");
WHEREAS, the Board of Directors of LABN has determined that it would be
in the best interests of LABN, its shareholders, its customers, and the areas
served by LABN to become affiliated with NBTB through the Merger;
WHEREAS, subject to the terms and conditions hereof, the respective
Boards of Directors of NBTB and LABN have agreed to cause the Merger pursuant to
the provisions of section 251 et seq. of the Delaware General Corporation Law
(the "GCL") and section 1921 et seq. of the Pennsylvania Business Corporation
Law (the "BCL");
WHEREAS, the parties intend that the Merger qualify as a tax-free
reorganization under section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that the business combination contemplated hereby be
accounted for under the "pooling-of-interests" accounting method; and
WHEREAS, the parties desire to make certain representations,
warranties, and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger;
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth, intending to be legally bound, the parties
agree as follows:
1. COMBINATION.
1.1. MERGER OF NBTB AND LABN. Subject to the provisions of this
Agreement, on the date and at the time to be specified in the Certificate of
Merger to be filed on the date of the Closing with the Secretary of State of the
State of Delaware pursuant to the GCL and in the Articles of Merger to be filed
on the date of the Closing with the Secretary of State of the Commonwealth of
Pennsylvania pursuant to the BCL (the "Effective Time"), LABN will be merged
with and into NBTB.
1.2. EFFECT OF THE MERGER. At the Effective Time:
(a) LABN and NBTB (the "Constituent Corporations") shall be a
single corporation, which shall be NBTB. NBTB is hereby designated as the
surviving corporation in the Merger and is hereinafter sometimes called the
"Surviving Corporation."
(b) The separate existence of LABN shall cease.
(c) The Surviving Corporation shall have all the rights,
privileges, immunities, and powers and shall assume and be subject to all the
duties and liabilities of a corporation organized under the GCL.
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(d) The Surviving Corporation shall thereupon and thereafter
possess all of the rights, privileges, immunities, and franchises, of a public
as well as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account,
including subscriptions for shares and all other choses in action, and all and
every other interest of and belonging to or due to each of the Constituent
Corporations shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further action, act or deed; and the title to any
real estate, or any interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.
(e) The Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities and obligations of each of the Constituent
Corporations; and any claim existing or action or proceeding pending by or
against either of the Constituent Corporations may be prosecuted to judgment as
if the Merger had not taken place, or the Surviving Corporation may be proceeded
against or substituted in its place. The Surviving Corporation expressly assumes
and agrees to perform all of LABN's liabilities and obligations. Neither the
rights of creditors nor any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger.
(f) Any taxes, penalties, and public accounts of the
Commonwealth of Pennsylvania, claimed against either of the Constituent
Corporations but not settled, assessed, or determined prior to the Merger shall
be settled, assessed, or determined against the Surviving Corporation and,
together with interest thereon, shall be a lien against the franchises and
property, both real and personal, of the Surviving Corporation.
(g) CERTIFICATE OF INCORPORATION.
(i)......In the event that, prior to the Effective
Time, NBTB's stockholders approve a proposed amendment to NBTB's
Certificate of Incorporation to increase the number of authorized
shares of NBTB common stock from fifteen million to thirty million (the
"Share Increase Amendment"), and the NBTB Board of Directors causes
NBTB to file with the Delaware Secretary of State an appropriate
Certificate of Amendment reflecting such approval, NBTB's Certificate
of Incorporation as it exists immediately prior to the Effective Time
shall not be further amended in the Merger and shall be the Certificate
of Incorporation of the Surviving Corporation, until later amended
pursuant to Delaware law.
(ii).....in the event that, prior to the Effective
Time, (A) NBTB's stockholders approve a proposed amendment to NBTB's
Certificate of Incorporation authorizing a change in NBTB's authorized
stock from no par value shares to shares having a par value of $.01 per
share (the "Par Value Amendment"), and the NBTB Board of Directors
causes NBTB to file with the Delaware Secretary of State an appropriate
Certificate of Amendment reflecting such approval, but (B) NBTB's
stockholders do not approve the Share Increase Amendment, or NBTB's
Board of Directors does not cause NBTB to file with the Delaware
Secretary of State an appropriate Certificate of Amendment reflecting
approval of the Share Increase Amendment, the Certificate of
Incorporation of NBTB as it exists immediately prior to the Effective
Time shall be amended in the Merger by amending Article FOURTH thereof
to read as follows:
"FOURTH: The total number of shares of all classes of
stock which the Corporation shall have the authority to issue
is Twenty-Two Million Five Hundred Thousand (22,500,000)
shares, consisting of Twenty Million (20,000,000) shares of
Common Stock having a par value of $.01 per share and Two
Million Five Hundred Thousand (2,500,000) shares of Preferred
Stock having a par value of $.01 per share."
(iii)....in the event that, prior to the Effective
Time, (A) NBTB's stockholders do not approve either the Par Value
Amendment or the Share Increase Amendment, or (B) NBTB's stockholders
do not approve the Par Value Amendment and NBTB's Board of Directors
does not cause NBTB to file with the Delaware Secretary of State an
appropriate Certificate of Amendment reflecting approval of the Share
Increase Amendment, or (C) NBTB's stockholders do not approve the Share
Increase Amendment and NBTB's Board of Directors does not cause NBTB to
file with the Delaware Secretary of State an appropriate Certificate of
-2-
Amendment reflecting approval of the Par Value Amendment, or (D) NBTB's
Board of Directors does not cause NBTB to file with the Delaware
Secretary of State either an appropriate Certificate of Amendment
reflecting approval of the Share Increase Amendment or an appropriate
Certificate of Amendment reflecting approval of the Par Value
Amendment, the Certificate of Incorporation of NBTB as it exists
immediately prior to the Effective Time shall be amended in the Merger
by amending Article FOURTH thereof to read as follows:
"FOURTH: The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
Twenty-Two Million Five Hundred Thousand (22,500,000) shares,
consisting of Twenty Million (20,000,000) shares of Common
Stock having no par value, stated value $1.00 per share, and
Two Million Five Hundred Thousand (2,500,000) shares of
Preferred Stock having no par value, stated value $1.00 per
share."
As so amended, the Certificate of Incorporation of NBTB shall be the
Certificate of Incorporation of the Surviving Corporation, until later amended
pursuant to Delaware law.
(h) The By-Laws of NBTB as they exist immediately prior to the
Effective Time shall be the By-Laws of NBTB until later amended pursuant to
Delaware law.
(i) The authorized shares of capital stock of NBTB as of the
Effective Time (after giving effect to the Merger) shall be as set forth or
referred to in Section 1.2(g) hereof. The term "NBTB Common Stock" shall mean
the common stock of NBTB, no par value, $1.00 stated value, or the common stock
of NBTB as amended prior to or at the Effective Time, as the context may
require.
(j) Subject to the terms, conditions, and limitations set
forth herein, at the Effective Time and until surrendered for exchange and
payment, each outstanding stock certificate which, prior to the Effective Time,
represented shares of the common stock, $0.21 par value, of LABN (the "LABN
Common Stock"), other than any shares of LABN Common Stock held by NBTB (other
than in a fiduciary, representative, or custodial capacity), which shall be
canceled without any payment therefor, except for any dividends declared prior
to the Effective Time but not yet paid as of the Effective Time, shall, by
virtue of this Agreement and without any action on the part of the holder or
holders thereof, cease to represent an issued and existing share and shall be
converted into a right to receive from NBTB, and shall for all purposes
represent the right to receive, upon surrender of the certificate formerly
representing such shares, a certificate representing the number of shares of
NBTB Common Stock specified in section 1.3 of this Agreement; provided that,
with respect to any matters relating to stock certificates representing LABN
Common Stock, NBTB may rely conclusively upon the record of stockholders
maintained by LABN containing the names and addresses of the holders of record
of LABN's Common Stock at the Effective Time.
1.3. CONSIDERATION FOR MERGER. Subject to the terms, conditions, and
limitations set forth herein, as a result of the Merger, each share of LABN
Common Stock other than shares of LABN Common Stock held by NBTB (other than in
a fiduciary, representative, or custodial capacity) shall be converted into the
right to receive, in exchange for each share of LABN Common Stock held of record
as of the Effective Time, that number of shares (the "Exchange Ratio") of NBTB
Common Stock calculated (subject to the next sentence and to the procedures
specified in section 11.2(d)(ii) of this Agreement) by dividing $18.50 by the
average of the closing bid price and the closing asked price per share for NBTB
Common Stock as reported on the Nasdaq National Market (or, in the absence
thereof, as reported by or determined by reference to such other source upon
which NBTB and LABN shall agree) for each of the twenty consecutive trading days
ending on and including the eighth trading day before the Effective Time (the
"Average Closing Price"). Notwithstanding the foregoing, however, (a) if the
ratio computed in accordance with the preceding sentence is less than 0.8315,
-3-
then the Exchange Ratio shall be 0.8315; and (b) if the ratio computed in
accordance with the preceding sentence is more than 0.9487, then the Exchange
Ratio shall be 0.9487.
1.4. NO FRACTIONAL SHARES. NBTB will not issue fractional shares of its
stock. In lieu of fractional shares of NBTB Common Stock, if any, each
shareholder and, if applicable, each optionholder of LABN who is entitled to a
fractional share of NBTB Common Stock shall receive an amount of cash equal to
the product of such fraction times the Average Closing Price. Such fractional
share interest shall not include the right to vote or to receive dividends or
any interest thereon.
1.5. DIVIDENDS; INTEREST. No shareholder of LABN will be entitled to
receive dividends on his, her or its NBTB Common Stock until he, she or it
exchanges his, her or its certificates representing LABN Common Stock for NBTB
Common Stock. Any dividends declared on NBTB Common Stock to holders of record
on or after the Effective Time shall, with respect to stock to be delivered
pursuant to this Agreement to shareholders of LABN who have not exchanged their
certificates representing LABN Common Stock for NBTB Common Stock, be paid to
the Exchange Agent (as designated in section 1.6 of this Agreement) and, upon
receipt from a former shareholder of LABN of certificates representing shares of
LABN Common Stock, the Exchange Agent shall forward to such former shareholder
of LABN (i) certificates representing his, her or its shares of NBTB Common
Stock, (ii) dividends declared thereon subsequent to the Effective Time (without
interest) and (iii) the cash value of any fractional shares determined in
accordance with section 1.4 hereof.
1.6. DESIGNATION OF EXCHANGE AGENT.
(a) The parties to this Agreement hereby designate American
Stock Transfer and Trust Company, New York, New York ("AST") as Exchange Agent
to effect the exchanges contemplated hereby.
(b) NBTB will, promptly after the Effective Time, issue and
deliver to AST the share certificates representing shares of NBTB Common Stock
(each a "New Certificate") and the cash to be paid to holders of LABN Common
Stock in accordance with this Agreement.
(c) If any New Certificate is to be issued in a name other
than that in which the certificate formerly representing LABN Common Stock (an
"Old Certificate") and surrendered for exchange was issued, the Old Certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer and the person requesting such exchange shall pay to AST any transfer
or other taxes required by reason of the issuance of the New Certificate in any
name other than that of the registered holder of the Old Certificate
surrendered, or establish to the satisfaction of AST that such tax has been paid
or is not payable.
(d) In the event that any Old Certificates have not been
surrendered for exchange in accordance with this Agreement on or before the
second anniversary of the Effective Time, NBTB may at any time thereafter, with
or without notice to the holders of record of such Old Certificates, sell for
the accounts of any or all of such holders any or all of the shares of NBTB
Common Stock which such holders are entitled to receive under Section 1.3 hereof
(the "Unclaimed Shares"). Any such sale may be made by public or private sale or
sale at any broker's board or on any securities exchange in such manner and at
such times as NBTB shall determine. If, in the opinion of counsel for NBTB, it
is necessary or desirable, any Unclaimed Shares may be registered for sale under
the Securities Act of 1933, as amended (the "Securities Act") and applicable
state laws. NBTB shall not be obligated to make any sale of Unclaimed Shares if
it shall determine not to do so, even if notice of sale of the Unclaimed Shares
has been given. The net proceeds of any such sale of Unclaimed Shares shall be
held for holders of the unsurrendered Old Certificates whose Unclaimed Shares
have been sold, to be paid to them upon surrender of the Old Certificates. From
and after any such sale, the sole right of the holders of the unsurrendered Old
Certificates whose Unclaimed Shares have been sold shall be the right to collect
the net sale proceeds held by NBTB for their respective accounts, and such
holders shall not be entitled to receive any interest on such net sale proceeds
held by NBTB.
-4-
(e) If any Old Certificates are not surrendered prior to the
date on which such certificates would otherwise escheat to or become the
property of any governmental unit or agency, the unclaimed items shall, to the
extent permitted by abandoned property and any other applicable law, become the
property of NBTB (and to the extent not in its possession shall be paid over to
it), free and clear of all claims or interest of any person previously entitled
to such claims. Notwithstanding the foregoing, neither NBTB nor its agents or
any other person shall be liable to any former holder of LABN Common Stock for
any property delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
1.7. NOTICE OF EXCHANGE. Promptly after the Effective Time, AST shall
mail to each holder of one or more certificates formerly representing LABN
Common Stock a notice specifying the Effective Time and notifying such holder to
surrender his, her or its certificate or certificates to AST for exchange. Such
notice shall be mailed to holders by regular mail at their addresses on the
records of LABN.
1.8. ACTS TO CARRY OUT THIS MERGER PLAN.
(a) LABN and its proper officers and directors shall do all
such acts and things as may be necessary or proper to vest, perfect, or confirm
in NBTB title to such property or rights as are specified in sections 1.2(c) and
1.2(d) of this Agreement and otherwise to carry out the purposes of this
Agreement.
(b) If, at any time after the Effective Time, NBTB shall
consider or be advised that any further assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect, or confirm, of
record or otherwise, in NBTB its right, title, or interest in or under any of
the rights, properties, or assets of LABN acquired or to be acquired by NBTB as
a result of, or in connection with, the Merger, or (ii) otherwise carry out the
purposes of this Agreement, LABN and its proper officers and directors shall be
deemed to have granted to NBTB an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments, and assurances in law and to do all
acts necessary or proper to vest, perfect, or confirm title to and possession of
such rights, properties, or assets in NBTB and otherwise to carry out the
purposes of this Agreement; and the proper officers and directors of NBTB are
fully authorized in the name of LABN or otherwise to take any and all such
action.
1.9. TREATMENT OF STOCK OPTIONS.
(a) If, on or prior to the Determination Date (as defined in
section 11.2(d)(iii)(A) of this Agreement), NBTB and LABN shall have received
from each person listed on Schedule 6.9 hereof and each other person who holds
an unexercised stock option to purchase LABN Common Stock, whether vested or
unvested, an executed letter in form and substance reasonably acceptable to NBTB
and LABN, stating that:
(i).....he or she has (A) received and read the Joint
Proxy Statement/Prospectus relating to the Merger and understands the contents
of the Joint Proxy Statement/ Prospectus as it relates to the Merger, (B)
discussed with legal counsel of his or her choice the effect of delivering the
subject letter, and (C) discussed with his or her tax advisor the tax effect of
receiving shares of NBTB common stock in exchange for the stock options to
purchase LABN Common Stock held by him or her and not exercised prior to the
Effective Time (each, a "Converted Option"), including that such exchange (I)
will result in ordinary taxable income to him or her to the extent of the full
amount of the fair market value of the shares of NBTB Common Stock received by
him or her in exchange for his or her Converted Options and (II) will give rise
to withholding obligations with respect to the income and employment taxes on
such ordinary income which must be met by him or her through the remittance of
cash to NBTB on or about the Effective Time to satisfy such withholding tax
obligations; and
(ii).....he or she elects to receive shares of NBTB
common stock in exchange for, and in full satisfaction, discharge, and
settlement for, his or her Converted Options,
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then at the Effective Time, each Converted Option, whether vested or unvested,
shall automatically be converted into that number of shares of NBTB Common Stock
equal to the quotient obtained by dividing (A) the value of the Converted Option
at the Effective Time (determined by subtracting the aggregate exercise price
under such Converted Option at the Effective Time from the product of (I) the
number of shares of LABN Common Stock subject to such Converted Option at the
Effective Time, (II) the Exchange Ratio, and (III) the Average Closing Price) by
(B) the Average Closing Price.
(b) If by the Determination Date NBTB and LABN shall not have
received from each person listed on Schedule 6.9 hereof and each other person
who holds an unexercised stock option to purchase LABN Common Stock, whether
vested or unvested, an executed letter as contemplated by subsection (a) of this
section 1.9, then
(i).....at the Effective Time, each Converted Option,
whether vested or unvested, shall automatically be converted into an option (a
"Replacement Option") to acquire, on the same terms and conditions as were
applicable under the terms of such Converted Option and any option plan under
which such Converted Option was issued (or as near thereto as is practicable), a
number of shares of NBTB Common Stock equal to (rounded down to the nearest
whole number of shares) (a) the number of shares of LABN Common Stock subject to
such Converted Option as of the Effective Time multiplied by (b) the Exchange
Ratio, at an exercise price per share (rounded down to the nearest whole cent)
equal to (x) the aggregate exercise price under such Converted Option for all of
the shares of LABN Common Stock subject to such Converted Option at the
Effective Time divided by (y) the number of shares of NBTB Common Stock subject
to such Replacement Option;
(ii)....notwithstanding the foregoing subsection (i),
each Converted Option which is intended to be an "incentive stock option" (as
defined in section 422 of the Code) shall be adjusted in accordance with the
requirements of section 424 of the Code;
(iii)....at or prior to the Effective Time, LABN
shall take all action, if any, necessary with respect to any Converted Options
or stock plans under which Converted Options have been issued to permit the
replacement of the Converted Options with Replacement Options as contemplated by
this section 1.9; and
(iv).....at the Effective Time, NBTB shall assume
such stock plans; provided, that such assumption shall
only be in respect of the Replacement Options and that NBTB shall have no
obligation with respect to any awards under such plans other than the
Replacement Options and shall have no obligation to make any additional grants
or awards under such assumed plans.
1.10. STOCK OPTION AGREEMENT. Simultaneously herewith, NBTB and LABN
shall execute and deliver the Stock Option Agreement in the form attached hereto
as Exhibit I. The option that is the subject of the Stock Option Agreement will
terminate as of, and will not be exercisable following, the Effective Time.
1.11. EXECUTIVE OFFICERS AND DIRECTORS OF LABN.
(a) At the Effective Time, in consideration for and against
delivery of a full and unconditional release granted in favor of NBTB, LABN, and
LA Bank, National Association ("LA Bank") by John G. Martines ("Martines") from
any and all claims, actions, or liabilities which Martines may have, may have
had, or could have against NBTB, LABN, or LA Bank (except entitlements granted
to Martines by this Agreement, the employment agreement described in section 4.8
hereof (the "Martines Employment Agreement"), the LA Bank, N.A. Salary
Continuation Agreement dated March 11, 1997 between LA Bank and Martines, the
Supplementary Retirement Benefit Agreement dated January 6, 1995 between LA Bank
and Martines, and the Salary Continuation Agreement dated May 5, 1989 between LA
Bank and Martines), and subject in every case to section 18(k) of the Federal
Deposit Insurance Act (12 U.S.C. ss. 1828(k)), NBTB will tender to Martines the
Martines Employment Agreement and the change-in-control agreement described in
section 5.5 hereof.
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(b) At the Effective Time, in consideration for and against
delivery of a full and unconditional release granted in favor of NBTB, LABN, and
LA Bank, National Association ("LA Bank") by Louis M. Martarano ("Martarano")
from any and all claims, actions, or liabilities which Martarano may have, may
have had, or could have against NBTB, LABN, or LA Bank (except entitlements
granted to Martarano by this Agreement or the LA Bank, N.A. Salary Continuation
Agreement dated March 11, 1997 between LA Bank and Martarano), and subject in
every case to section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. ss.
1828(k)), NBTB will tender to Martarano the change-in-control agreement
described in section 5.5 hereof.
(c) At the Effective Time, in consideration for and against
delivery of a full and unconditional release granted in favor of NBTB, LABN, and
LA Bank, National Association ("LA Bank") by Joseph J. Earyes ("Earyes") from
any and all claims, actions, or liabilities which Earyes may have, may have had,
or could have against NBTB, LABN, or LA Bank (except entitlements granted to
Earyes by this Agreement or the LA Bank, N.A. Salary Continuation Agreement
dated March 11, 1997 between LA Bank and Earyes), and subject in every case to
section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1828(k)), NBTB
will tender to Earyes the change-in-control agreement described in section 5.5
hereof.
(d) Subject to the fiduciary duties of its directors to NBTB,
as promptly as practicable after the Effective Time NBTB will use its best
efforts to cause William C. Gumble ("Gumble"), Bruce D. Howe ("Howe"), and
Martines to be elected or appointed as directors of NBTB, with Gumble to serve
as a director of the class whose term expires in 2001, Martines to serve as a
director of the class whose term expires in 2000, and Howe to serve as a
director of the class whose term expires in 2002.
(e) At its next annual meeting of stockholders, NBTB will
propose to its stockholders that Martines be reelected to the board of directors
of NBTB as a member of the class whose term shall expire in 2003.
1.12. EMPLOYEE BENEFITS.
(a) If any employee of LABN or of LA Bank becomes a
participant in any employment benefit plan, practice, or policy of NBTB or NBT
Bank, National Association ("NBT Bank"), such employee shall be given credit
under such plan, practice, or policy for all service prior to the Effective Time
with LABN or LA Bank for purposes of eligibility and vesting, but not for
benefit accrual purposes, for which such service is taken into account or
recognized, and, if necessary, NBTB shall cause any and all pre-existing
condition limitations and eligibility waiting periods under group health plans
to be waived with respect to such participants and their eligible dependents
(except to the extent such pre-existing condition limitations are no more
onerous than similar limitations, or such waiting periods do not extend any
waiting period, applicable to such employee under the plans of LABN or LA Bank),
provided that there be no duplication of such benefits as are provided under any
employee benefit plans, practices, or policies of LABN or LA Bank that continue
in effect following the Effective Time.
(b) Each employee of LABN or LA Bank (except Martines,
Martarano, and Earyes) who becomes an employee of NBTB or any of its
subsidiaries or who, following the Effective Time, remains an employee of LA
Bank and is terminated by NBTB or any of its subsidiaries (including LA Bank)
subsequent to the Effective Time shall be entitled to severance pay, if any, in
accordance with the general severance policy of NBTB. Such employee's service
with LABN or LA Bank shall be treated as service with NBTB for purposes of
determining the amount of severance pay, if any, under the severance policy of
NBTB.
2. EFFECTIVE TIME.
The Effective Time shall be the date and time specified in the
certificate of merger to be filed with the Secretary of State of the State of
Delaware pursuant to section 252 of the GCL to effectuate the Merger, the date
of which shall be the latest of:
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2.1. LABN SHAREHOLDER APPROVAL. The day upon which the shareholders of
LABN approve, ratify, and confirm the Merger by the affirmative vote of the
holders of at least 66_ percent of the outstanding shares of LABN Common Stock;
2.2. NBTB SHAREHOLDER APPROVAL. The day upon which the shareholders of
NBTB approve this Agreement;
2.3. FEDERAL RESERVE APPROVAL. The first to occur of (a) the date
thirty days following the date of the order of the Board of Governors of the
Federal Reserve System or the Federal Reserve Bank of New York acting pursuant
to authority delegated to it by the Board of Governors of the Federal Reserve
System (collectively, the "Board of Governors") approving the Merger, or (b) if,
pursuant to section 321(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (the "Riegle Act"), the Board of Governors shall have
prescribed a shorter period of time with the concurrence of the Attorney General
of the United States, the date on which such shorter period of time shall
elapse; or
2.4. PENNSYLVANIA DEPARTMENT OF BANKING APPROVAL. The date ten days
following the date of the order of the Department of Banking of the Commonwealth
of Pennsylvania (the "Department") approving the transactions contemplated by
this Agreement;
2.5. OTHER REGULATORY APPROVALS. The date upon which any other material
order, approval, or consent of a federal or state regulator of financial
institutions or financial institution holding companies authorizing consummation
of the transactions contemplated by this Agreement is obtained or any waiting
period mandated by such order, approval, or consent has run;
2.6. EXPIRATION OF STAYS. Ten days after any stay of the approvals of
any of the Board of Governors or the Department of the transactions contemplated
by this Agreement or any injunction against closing of said transactions is
lifted, discharged, or dismissed; or
2.7. MUTUAL AGREEMENT. Such other date as shall be mutually agreed to
by NBTB and LABN.
3. CONDITIONS PRECEDENT TO PERFORMANCE OF OBLIGATIONS OF THE PARTIES.
The obligations of NBTB and LABN to consummate the Merger shall be
subject to the conditions that on or before the Effective Time:
3.1. REGULATORY APPROVALS. Orders, consents, and approvals required to
consummate the Merger shall have been entered by the requisite governmental
authorities, and all statutory waiting periods in respect thereof shall have
expired.
3.2. REGISTRATION STATEMENT.
(a) EFFECTIVENESS. The registration statement to be filed by
NBTB with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act in connection with the registration of the shares of NBTB Common
Stock to be used as consideration in connection with the Merger (the
"Registration Statement") shall have become effective under the Securities Act,
and NBTB shall have received all required state securities laws or "blue sky"
permits and other required authorizations or confirmations of the availability
of exemptions from registration requirements necessary to issue NBTB Common
Stock in the Merger.
(b) ABSENCE OF STOP-ORDER. Neither the Registration Statement
nor any such required permit, authorization, or confirmation shall be subject to
a stop-order or threatened stop-order by the SEC or any state securities
authority.
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3.3. APPROVAL BY SHAREHOLDERS OF LABN. The shareholders of LABN shall
have authorized, ratified, and confirmed the Merger by the affirmative vote of
the holders of at least 66_ percent of the outstanding shares of LABN Common
Stock.
3.4. APPROVAL BY SHAREHOLDERS OF NBTB. The shareholders of NBTB shall
have approved this Agreement by the affirmative vote of the holders of a
majority of the outstanding shares of NBTB Common Stock.
3.5. FEDERAL INCOME TAXATION. NBTB and LABN shall have received a
written opinion of Saul, Ewing, Remick & Saul LLP, or of another firm mutually
agreeable to NBTB and LABN, applying existing law, that the Merger shall qualify
as a reorganization under section 368(a)(1) of the Code and the regulations and
rulings promulgated thereunder. In rendering such opinion, the firm rendering
the opinion may require and rely upon representations contained in certificates
of officers of NBTB, LABN, and others.
3.6. ADVERSE LEGISLATION. Subsequent to the date of this Agreement, no
legislation shall have been enacted and no regulation or other governmental
requirement shall have been adopted or imposed that renders or will render
consummation of the Merger impossible or illegal.
3.7. ABSENCE OF LITIGATION. No action, suit, or proceeding shall have
been instituted or shall have been threatened before any court or other
governmental body or by any public authority to restrain, enjoin, or prohibit
the Merger, or which would reasonably be expected to restrict materially the
operation of the business of LABN or that of LA Bank or the exercise of any
rights with respect thereto or to subject either of the parties hereto or any of
their subsidiaries, directors, or officers to any liability, fine, forfeiture,
divestiture, or penalty on the ground that the transactions contemplated hereby,
the parties hereto, or their subsidiaries, directors, or officers have breached
or will breach any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby and with
respect to which the parties hereto have been advised by counsel that, in the
opinion of such counsel, such action, suit, or proceeding raises substantial
questions of law or fact which could reasonably be decided materially adversely
to either party hereto or its subsidiaries, directors, or officers.
4. CONDITIONS PRECEDENT TO PERFORMANCE OF THE OBLIGATIONS OF NBTB.
The obligations of NBTB hereunder are subject to the satisfaction, on
or prior to the Effective Time, of all the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by NBTB in
writing unless not so permitted by law:
4.1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of LABN contained in this Agreement shall be true
and correct in all material respects as of the Effective Time with the same
effect as if such representations and warranties had been made or given at and
as of such date, except that representations and warranties of LABN contained in
this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by LABN on or prior to the Effective Time
shall have been so performed or met. On the date of the Effective Time, the
president and chief executive officer and the chief financial officer of LABN
shall deliver to NBTB a certificate to that effect. The delivery of such
certificates shall in no way diminish the warranties, representations,
covenants, and obligations of LABN made in this Agreement.
4.2. OPINION OF LABN COUNSEL. NBTB shall have received a favorable
opinion from Saul, Ewing, Remick & Saul LLP, dated the date of the Effective
Time, substantially in form and substance as that set forth as Exhibit II
attached hereto.
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4.3. OPINION OF LABN LITIGATION COUNSEL. NBTB shall have received a
favorable opinion from legal counsel handling litigation matters for LABN and LA
Bank, dated the date of the Effective Time, substantially in form and substance
as that set forth as Exhibit III attached hereto.
4.4. NO ADVERSE DEVELOPMENTS.
(a) During the period from June 30, 1999 to the Effective
Time, (i) there shall not have been any material adverse effect as defined in
section 12.7(d) (a "Material Adverse Effect") with respect to LABN; and (ii)
none of the events described in clauses (a) through (f) of section 6.16 of this
Agreement shall have occurred, and each of the practices and conditions
described in clauses (x) through (z) of that section shall have been maintained.
(b) As of the Effective Time, the capital structure of LABN
and the capital structure of LA Bank shall be as stated in section 6.9.
(c) As of the Effective Time, other than liabilities incurred
in the ordinary course of business subsequent to June 30, 1999, there shall be
no liabilities of LABN or LA Bank which are material to LABN on a consolidated
basis which were not reflected on the consolidated statement of condition of
LABN as of June 30, 1999 or in the related notes to the consolidated statement
of condition of LABN as of June 30, 1999.
(d) No adverse action shall have been instituted or threatened
against LABN or any of its subsidiaries by any governmental authority, or
referred by a governmental authority to another governmental authority, for the
enforcement or assessment of penalties for the violation of any laws or
regulations relating to equal credit opportunity, fair housing, or fair lending.
(e) NBTB shall have received a certificate dated the date of
the Effective Time, signed by the president and the chief financial officer of
LABN, certifying to the matters set forth in paragraphs (a), (b), (c), and (d)
of this section 4.4. The delivery of such officers' certificate shall in no way
diminish the warranties and representations of LABN made in this Agreement.
4.5. CONSOLIDATED NET WORTH. On and as of the Effective Time, the
consolidated net worth of LABN as determined in accordance with generally
accepted accounting principles shall not be less than the sum of (a)
$35,079,000, (b) the proceeds to LABN of the sale of treasury stock since June
30, 1999, and (c) the proceeds to LABN of the exercise of stock options to
purchase shares of LABN Common Stock since June 30, 1999.
4.6. LOAN LOSS RESERVE. On and as of the Effective Time, the aggregate
reserve for loan losses of LA Bank as determined in accordance with generally
accepted accounting principles shall not be less than $2,350,000.
4.7. CRA RATING. The CRA rating of LA Bank shall be no lower than
"satisfactory."
4.8. EMPLOYMENT AGREEMENT. Martines shall have entered into an
employment agreement with NBTB substantially in form and substance as that set
forth as Exhibit IV attached hereto.
4.9. RELEASES. The releases described in sections 1.11(a), (b), and
(c) shall have been delivered to NBTB.
4.10. ACCOUNTING TREATMENT. NBTB shall have received letters (the
"Pooling Letters") from KPMG LLP ("KPMG"), the independent auditing firm of
NBTB, dated the date of or shortly prior to each of the mailing date of the
proxy materials to the shareholders of LABN, and the date of the Effective Time,
stating the opinion of KPMG that the Merger shall qualify for
pooling-of-interest accounting treatment.
4.11. AFFILIATES' AGREEMENTS. NBTB shall have received a written
agreement substantially in form and substance as that set forth as Exhibit V
attached hereto (an "Affiliates Agreement"):
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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 LABN (as that term is
used in section 7.6 of this Agreement), and
(b) not later than ten days after any other person becomes an
"affiliate" of LABN (as that term is used in section 7.6 of this Agreement),
from such person.
5. CONDITIONS PRECEDENT TO PERFORMANCE OF OBLIGATIONS OF LABN.
The obligations of LABN hereunder are subject to the satisfaction, on
or prior to the Effective Time, of all the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by LABN in
writing unless not so permitted by law:
5.1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of NBTB contained in this Agreement shall be true
and correct in all material respects as of the Effective Time with the same
effect as if such representations and warranties had been made or given at and
as of such date, except that representations and warranties of NBTB contained in
this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by NBTB on or prior to the Effective Time
shall have been so performed or met. On the date of the Effective Time, either
the president or an executive vice president of NBTB shall deliver to LABN a
certificate to that effect. The delivery of such officer's certificate shall in
no way diminish the warranties, representations, covenants, and obligations of
NBTB made in this Agreement.
5.2. OPINION OF NBTB COUNSEL. LABN shall have received a favorable
opinion of Duane, Morris & Heckscher LLP, dated the date of the Effective Time,
substantially in form and substance as that set forth as Exhibit VI attached
hereto.
5.3. NO ADVERSE DEVELOPMENTS. During the period from June 30, 1999 to
the Effective Time, there shall not have been any Material Adverse Effect with
respect to NBTB, and LABN shall have received a certificate dated the date of
the Effective Time signed by either the President or an Executive Vice President
of NBTB to the foregoing effect. The delivery of such officer's certificate
shall in no way diminish the warranties and representations of NBTB made in this
Agreement.
5.4. STATUS OF NBTB COMMON STOCK. The shares of NBTB Common Stock to be
issued to the shareholders of LABN upon consummation of the Merger shall have
been authorized for inclusion on the Nasdaq National Market (or another national
securities exchange) subject
