EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER made as of the sixteenth day of August,
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.
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1.2. Effect of the Merger. At the Effective Time:
(a) LABN and NBTB (the "Constituent Corporations") shall be a single
corporation, which shall be NBTB. NBTB is hereby designated as the surviving
corporation in the Merger and is hereinafter sometimes called the "Surviving
Corporation."
(b) The separate existence of LABN shall cease.
(c) The Surviving Corporation shall have all the rights, privileges,
immunities, and powers and shall assume and be subject to all the duties and
liabilities of a corporation organized under the GCL.
(d) The Surviving Corporation shall thereupon and thereafter possess
all of the rights, privileges, immunities, and franchises, of a public as well
as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account,
including subscriptions for shares and all other choses in action, and all and
every other interest of and belonging to or due to each of the Constituent
Corporations shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further action, act or deed; and the title to any
real estate, or any interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.
(e) The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the Constituent
Corporations; and any claim existing or action or proceeding pending by or
against either of the Constituent Corporations may be prosecuted to judgment as
if the Merger had not taken place, or the Surviving Corporation may be proceeded
against or substituted in its place. The Surviving Corporation expressly assumes
and agrees to perform all of LABN's liabilities and obligations. Neither the
rights of creditors nor any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger.
(f) Any taxes, penalties, and public accounts of the Commonwealth of
Pennsylvania, claimed against either of the Constituent Corporations but not
settled, assessed, or determined prior to the Merger shall be settled, assessed,
or determined against the Surviving Corporation and, together with interest
thereon, shall be a lien against the franchises and property, both real and
personal, of the Surviving Corporation.
(g) The Certificate of Incorporation of NBTB as it exists immediately
prior to the Effective Time shall be amended by amending Article FOURTH thereof
to read as follows:
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is Twenty Million
(20,000,000) shares, consisting of Seventeen Million Five Hundred Thousand
(17,500,000) 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.
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and, as so amended, 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 shall be 2,500,000 shares of Preferred Stock, no par value, $1.00 stated
value, and 17,500,000 shares of Common Stock, no par value, $1.00 stated value
(the "NBTB 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, $0.21 par value, of LABN (the "LABN Common Stock"),
other than any shares of LABN Common Stock held by NBTB (other than in a
fiduciary, representative, or custodial capacity), which shall be canceled
without any payment therefor, except for any dividends declared prior to the
Effective Time but not yet paid as of the Effective Time, shall, by virtue of
this Agreement and without any action on the part of the holder or holders
thereof, cease to represent an issued and existing share and shall be converted
into a right to receive from NBTB, and shall for all purposes represent the
right to receive, upon surrender of the certificate formerly representing such
shares, a certificate representing the number of shares of NBTB Common Stock
specified in section 1.3 of this Agreement; provided that, with respect to any
matters relating to stock certificates representing LABN Common Stock, NBTB may
rely conclusively upon the record of stockholders maintained by LABN containing
the names and addresses of the holders of record of LABN's Common Stock at the
Effective Time.
1.3. Consideration for Merger. Subject to the terms, conditions, and
limitations set forth herein, as a result of the Merger, each share of LABN
Common Stock other than shares of LABN Common Stock held by NBTB (other than in
a fiduciary, representative, or custodial capacity) shall be converted into the
right to receive, in exchange for each share of LABN Common Stock held of record
as of the Effective Time, that number of shares (the "Exchange Ratio") of NBTB
Common Stock calculated (subject to the next sentence and to the procedures
specified in section 11.2(d)(ii) of this Agreement) by dividing $18.50 by the
average of the closing bid price and the closing asked price per share for NBTB
Common Stock as reported on the Nasdaq National Market (or, in the absence
thereof, as reported by or determined by reference to such other source upon
which NBTB and LABN shall agree) for each of the twenty consecutive trading days
ending on and including the eighth trading day before the Effective Time (the
"Average Closing Price"). Notwithstanding the foregoing, however, (a) if the
ratio computed in accordance with the preceding sentence is less than 0.8315,
then the Exchange Ratio shall be 0.8315; and (b) if the ratio computed in
accordance with the preceding sentence is more than 0.9487, then the Exchange
Ratio shall be 0.9487.
1.4. No Fractional Shares. NBTB will not issue fractional shares of its
stock. In lieu of fractional shares of NBTB Common Stock, if any, each
shareholder of LABN who is entitled to a fractional share of NBTB Common Stock
shall receive an amount of cash equal to the product of such fraction times the
Average Closing Price. Such fractional share interest shall not include the
right to vote or to receive
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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
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to them upon surrender of the Old Certificates. From and after any such sale,
the sole right of the holders of the unsurrendered Old Certificates whose
Unclaimed Shares have been sold shall be the right to collect the net sale
proceeds held by NBTB for their respective accounts, and such holders shall not
be entitled to receive any interest on such net sale proceeds held by NBTB.
(e) If any Old Certificates are not surrendered prior to the date on
which such certificates would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by abandoned property and any other applicable law, become the property of NBTB
(and to the extent not in its possession shall be paid over to it), free and
clear of all claims or interest of any person previously entitled to such
claims. Notwithstanding the foregoing, neither NBTB nor its agents or any other
person shall be liable to any former holder of LABN Common Stock for any
property delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
1.7. Notice of Exchange. Promptly after the Effective Time, AST shall mail
to each holder of one or more certificates formerly representing LABN Common
Stock a notice specifying the Effective Time and notifying such holder to
surrender his, her or its certificate or certificates to AST for exchange. Such
notice shall be mailed to holders by regular mail at their addresses on the
records of LABN.
1.8. Acts to Carry Out This Merger Plan.
(a) LABN and its proper officers and directors shall do all such acts
and things as may be necessary or proper to vest, perfect, or confirm in NBTB
title to such property or rights as are specified in sections 1.2(c) and 1.2(d)
of this Agreement and otherwise to carry out the purposes of this Agreement.
(b) If, at any time after the Effective Time, NBTB shall consider or be
advised that any further assignments or assurances in law or any other acts are
necessary or desirable to (i) vest, perfect, or confirm, of record or otherwise,
in NBTB its right, title, or interest in or under any of the rights, properties,
or assets of LABN acquired or to be acquired by NBTB as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, LABN and its proper officers and directors shall be deemed to have
granted to NBTB an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments, and assurances in law and to do all acts necessary or
proper to vest, perfect, or confirm title to and possession of such rights,
properties, or assets in NBTB and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of NBTB are fully authorized in
the name of LABN or otherwise to take any and all such action.
1.9. Treatment of Stock Options. At the Effective Time, each stock option
to purchase LABN Common Stock not exercised prior to the Effective Time (each, a
"Converted Option"), whether vested or unvested, shall automatically be
converted into an option (a "Replacement Option") to acquire, on the same terms
and conditions as were applicable under the terms of such Converted Option and
any option plan under which such Converted Option was issued (or as near thereto
as is practicable), a number of shares of NBTB Common Stock equal to (rounded
down to the nearest whole number of shares) (a) the number of shares of LABN
Common Stock subject to such Converted Option as of the
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Effective Time multiplied by (b) the Exchange Ratio, at an exercise price per
share (rounded down to the nearest whole cent) equal to (x) the aggregate
exercise price under such Converted Option for all of the shares of LABN Common
Stock subject to such Converted Option at the Effective Time divided by (y) the
number of shares of NBTB Common Stock subject to such Replacement Option.
Notwithstanding the foregoing, each Converted Option which is intended to be an
"incentive stock option" (as defined in section 422 of the Code) shall be
adjusted in accordance with the requirements of section 424 of the Code. At or
prior to the Effective Time, LABN shall take all action, if any, necessary with
respect to any Converted Options or stock plans under which Converted Options
have been issued to permit the replacement of the Converted Options with
Replacement Options as contemplated by this section 1.9. At the Effective Time,
NBTB shall assume such stock plans; provided, that such assumption shall only be
in respect of the Replacement Options and that NBTB shall have no obligation
with respect to any awards under such plans other than the Replacement Options
and shall have no obligation to make any additional grants or awards under such
assumed plans.
1.10. Stock Option Agreement. Simultaneously herewith, NBTB and LABN shall
execute and deliver the Stock Option Agreement in the form attached hereto as
Exhibit I. The option that is the subject of the Stock Option Agreement will
terminate as of, and will not be exercisable following, the Effective Time.
1.11. Executive Officers and Directors of LABN.
(a) At the Effective Time, in consideration for and against delivery of
a full and unconditional release granted in favor of NBTB, LABN, and LA Bank,
National Association ("LA Bank") by Xxxx X. Xxxxxxxx ("Xxxxxxxx") from any and
all claims, actions, or liabilities which Xxxxxxxx may have, may have had, or
could have against NBTB, LABN, or LA Bank (except entitlements granted to
Xxxxxxxx by this Agreement, the employment agreement described in section 4.8
hereof (the "Xxxxxxxx Employment Agreement"), the LA Bank, N.A. Salary
Continuation Agreement dated March 11, 1997 between LA Bank and Xxxxxxxx, the
Supplementary Retirement Benefit Agreement dated January 6, 1995 between LA Bank
and Xxxxxxxx, and the Salary Continuation Agreement dated May 5, 1989 between LA
Bank and Xxxxxxxx), and subject in every case to section 18(k) of the Federal
Deposit Insurance Act (12 U.S.C. Section 1828(k)), NBTB will tender to Xxxxxxxx
the Xxxxxxxx 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, LABN, and LA Bank,
National Association ("LA Bank") by Xxxxx X. Xxxxxxxxx ("Xxxxxxxxx") from any
and all claims, actions, or liabilities which Xxxxxxxxx may have, may have had,
or could have against NBTB, LABN, or LA Bank (except entitlements granted to
Xxxxxxxxx by this Agreement or the LA Bank, N.A. Salary Continuation Agreement
dated March 11, 1997 between LA Bank and Xxxxxxxxx), and subject in every case
to section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. Section
1828(k)), NBTB will tender to Xxxxxxxxx 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
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unconditional release granted in favor of NBTB, LABN, and LA Bank, National
Association ("LA Bank") by Xxxxxx X. Xxxxxx ("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. Section 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 Xxxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxx X. Xxxx ("Xxxx"), and Xxxxxxxx to
be elected or appointed as directors of NBTB, with Xxxxxx to serve as a director
of the class whose term expires in 2001, Xxxxxxxx to serve as a director of the
class whose term expires in 2000, and Xxxx 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 Xxxxxxxx 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.
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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:
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 2/3 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 Xxxxxx Community Development and Regulatory
Improvement Act of 1994 (the "Xxxxxx 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
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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.
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 2/3 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, Xxxxxx & Xxxx 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
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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, Xxxxxx & Xxxx LLP, dated the date of the Effective Time,
substantially in form and substance as that set forth as Exhibit II attached
hereto.
4.3. Opinion of LABN Litigation Counsel. NBTB shall have received a
favorable opinion from legal counsel handling litigation matters for LABN and LA
Bank, dated the date of the Effective Time, substantially in form and substance
as that set forth as Exhibit III attached hereto.
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
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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. Xxxxxxxx shall have entered into an employment
agreement with NBTB substantially in form and substance as that set forth as
Exhibit IV attached hereto.
4.9. Releases. The releases described in sections 1.11(a), (b), and (c)
shall have been delivered to NBTB.
4.10. Accounting Treatment. NBTB shall have received letters (the "Pooling
Letters") from KPMG LLP ("KPMG"), the independent auditing firm of NBTB, dated
the date of or shortly prior to each of the mailing date of the proxy materials
to the shareholders of LABN, and the date of the Effective Time, stating the
opinion of KPMG that the Merger shall qualify for pooling-of-interest accounting
treatment.
4.11. Affiliates' Agreements. NBTB shall have received a written agreement
substantially in form and substance as that set forth as Exhibit V attached
hereto (an "Affiliates Agreement"):
(a) on or before the date of this Agreement, from each person who, on
the date of this Agreement, is an "affiliate" of LABN (as that term is used in
section 7.6 of this Agreement), and
11
(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 to official notice of issuance.
5.5. Change-in-Control Agreements. NBTB shall have tendered to each of
Martines, Martarano, and Earyes a change-in-control agreement substantially in
form and substance as that set forth as Exhibit VII attached hereto.
6. REPRESENTATIONS AND WARRANTIES OF LABN.
LABN represents and warrants to NBTB as follows:
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6.1. Organization, Powers, and Qualification. Each of LABN and LA Bank is a
corporation which is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own and operate its properties and assets, to
lease properties used in its business, and to carry on its business as now
conducted. Each of LABN and LA Bank owns or possesses in the operation of its
business all franchises, licenses, permits, branch certificates, consents,
approvals, waivers, and other authorizations, governmental or otherwise, which
are necessary for it to conduct its business as now conducted, except for those
where the failure of such ownership or possession would not have a Material
Adverse Effect on LABN or LA Bank. Each of LABN and LA Bank is duly qualified
and licensed to do business and is in good standing in every jurisdiction with
respect to which the failure to be so qualified or licensed could result in a
Material Adverse Effect on LABN or LA Bank.
6.2. Execution and Performance of Agreement. LABN has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its respective terms.
6.3. Absence of Violations.
(a) Neither LABN nor LA Bank is (i) in violation of its respective
charter documents or bylaws, (ii) in violation of any applicable federal, state,
or local law or ordinance or any order, rule, or regulation of any federal,
state, local, or other governmental agency or body, or (iii) in violation of or
in default with respect to any order, writ, injunction, or decree of any court,
or any order, license, regulation, or demand of any governmental agency, except,
in the case of (ii) or (iii), for such violations or defaults which in the
aggregate could not reasonably be expected to have a Material Adverse Effect on
LABN or LA Bank; and neither LABN nor LA Bank has received any claim or notice
of violation with respect thereto;
(b) neither LABN nor LA Bank nor any member of the management of either
of them is a party to any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any regulatory order or decree with or by the Board of Governors, the Federal
Reserve Bank of Philadelphia, the Federal Deposit Insurance Corporation (the
"FDIC"), the SEC, the Department, any other banking or securities authority of
the United States or the Commonwealth of Pennsylvania, or any other regulatory
agency that relates to the conduct of the business of LABN or LA Bank or any of
their subsidiaries or their assets; and except as previously disclosed to NBTB
in writing, no such agreement, memorandum, order, condition, or decree is
pending or threatened;
(c) LA Bank has established policies and procedures to provide
reasonable assurance of compliance in a safe and sound manner with the federal
banking, credit, housing, consumer protection, and civil rights laws and the
regulations adopted under each of those laws, so that transactions be executed
and assets be maintained in accordance with such laws and regulations; and the
policies and practices of LA Bank with respect to all such laws and regulations
reasonably limit noncompliance and detect and report noncompliance to its
management; and
(d) LA Bank has established a CRA policy which provides for goals and
objectives
13
consistent with CRA and for procedures whereby all significant CRA-related
activity is documented; and LA Bank has officially designated a CRA officer who
reports directly to the board of directors and is responsible for the CRA
program of LA Bank.
6.4. Compliance with Agreements. Neither LABN nor LA Bank is in violation
of any term of any security agreement, mortgage, indenture, or any other
contract, agreement, instrument, lease, or certificate, except for such
violations which in the aggregate could not reasonably be expected to have a
Material Adverse Effect on LABN or LA Bank.
6.5. Binding Obligations. Subject to the approval of its shareholders, this
Agreement constitutes valid, legal, and binding obligations of LABN, enforceable
against it in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar law, or by general
principles of equity. The execution, delivery, and performance of this Agreement
and the transactions contemplated thereby have been duly and validly authorized
by the board of directors of LABN.
6.6. Absence of Default; Due Authorization.
(a) None of the execution or the delivery of this Agreement, the
consummation of the transactions contemplated thereby, or the compliance with or
fulfillment of the terms thereof will conflict with, or result in a breach of
any of the terms, conditions, or provisions of, or constitute a default under
the organizational documents or bylaws of LABN or LA Bank or any subsidiary of
either of them. Such execution, consummation, and fulfillment will not (i)
conflict with, or result in a breach of the terms, conditions, or provisions of,
or constitute a violation, conflict, or default under, or, except as set forth
on Schedule 6.6 hereof, give rise to any right of termination, cancellation, or
acceleration with respect to, or result in the creation of any lien, charge, or
encumbrance upon, any property or assets of LABN or LA Bank or any subsidiary of
either of them pursuant to any agreement or instrument under which LABN or LA
Bank or any such subsidiary is obligated or by which any of its properties or
assets may be bound, including without limitation any lease, contract, mortgage,
promissory note, deed of trust, loan, credit arrangement, or other commitment or
arrangement of LABN or LA Bank or any subsidiary of either of them in respect of
which it is an obligor, except for such conflicts, breaches, violations,
defaults, rights of termination, cancellation, or acceleration, or results which
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on LABN or LA Bank; (ii) if the Merger is approved by the Board of
Governors under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"), violate any law, statute, rule, or regulation of any government or agency
to which LABN or LA Bank or any subsidiary of either of them is subject and
which is material to its operations; or (iii) violate any judgment, order, writ,
injunction, decree, or ruling to which LABN or LA Bank or any subsidiary of
either of them or any of the properties or assets of any of them is subject or
bound. None of the execution or delivery of this Agreement, the consummation of
the transactions contemplated hereby, or the compliance with or fulfillment of
the terms hereof will require any authorization, consent, approval, or exemption
by any person which has not been obtained, or any notice or filing which has not
been given or done, other than approval of the transactions contemplated by this
Agreement by, notices to, or filings with by the Board of Governors, the
Securities and Exchange Commission (the "SEC"), state securities commissions,
the Department,
14
the Secretary of State of the State of Delaware, and the Secretary of State of
the Commonwealth of Pennsylvania.
(b) Except for approval of this Agreement by the affirmative vote of
the holders of at least 66 2/3 percent of the outstanding shares of LABN Common
Stock, no other corporate proceedings on the part of LABN are necessary to
approve or authorize this Agreement, the Merger, the Stock Option Agreement, the
issuance of the stock options contemplated by the Stock Option Agreement, the
subsequent exercise of the stock options thereby issued, or the other
transactions contemplated by this Agreement and the Stock Option Agreement or
the carrying out of the transactions contemplated hereby or thereby.
(c) The Board of Directors of LABN has taken all necessary action so
that the provisions of sections 2561 et seq. of the BCL (and any applicable
provisions of the takeover laws of any other state) and any comparable
provisions of LABN's articles of incorporation do not and will not apply to this
Agreement, the Merger, the Stock Option Agreement, or the transactions
contemplated hereby.
(d) LABN has not adopted any shareholder rights plan, "poison pill" or
similar plan, or any other plan which could result in the grant of any rights to
any person, or which could enable or require any rights to be exercised,
distributed or triggered, in the event of the execution, delivery, or
announcement of this Agreement or the Stock Option Agreement, or in the event of
the consummation of the Merger or any of the transactions contemplated by this
Agreement or the Stock Option Agreement.
6.7. Compliance with BHC Act; Certain Banking Regulatory Matters.
(a) LABN is duly registered as a bank holding company under the BHC
Act. All of the activities and investments of LABN conform to the requirements
applicable generally to bank holding companies under the BHC Act and the
regulations of the Board of Governors adopted thereunder.
(b) No corporation or other entity, other than LABN, is registered or
is required to be registered as a bank holding company under the BHC Act by
virtue of its control over LA Bank or over any company that directly or
indirectly has control over LA Bank.
(c) Each of the activities engaged in by LABN and its direct and
indirect subsidiaries has been determined by regulation of the Board of
Governors to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.
(d) The capital ratios of each of LABN and LA Bank comply fully with
all terms of all currently outstanding supervisory and regulatory requirements
and with the conditions of all regulatory orders and decrees.
6.8. Subsidiaries.
(a) Other than LA Bank, which is a direct, wholly-owned subsidiary of
LABN, LA Lease, Inc.
15
("LALI") and Ariel Financial Services, Inc. ("AFSI"), each of which is a direct,
wholly-owned subsidiary of LA Bank, and Premier Realty Settlement Services
("Premier"), a Pennsylvania limited partnership currently in organization in
which AFSI will purchase a noncontrolling, 50-percent limited partnership
interest in exchange for an initial capital contribution of $5,000, LABN does
not have any direct or indirect subsidiaries and does not directly or indirectly
own, control, or hold with the power to vote any shares of the capital stock of
any company (except shares held by LA Bank for the account of others in a
fiduciary or custodial capacity in the ordinary course of its business and
shares of the Federal Reserve Bank of Philadelphia and the Federal Home Loan
Bank of Pittsburgh). There are no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments, or agreements calling for or
requiring the issuance, transfer, sale, or other disposition of any shares of
the capital stock of LA Bank, LALI, or AFSI, or calling for or requiring the
issuance of any securities or rights convertible into or exchangeable for shares
of capital stock of LA Bank, LALI, or AFSI. There are no other direct or
indirect subsidiaries of LABN which are required to be consolidated or accounted
for on the equity method in the consolidated financial statements of LABN or the
financial statements of LA Bank prepared in accordance with generally accepted
accounting principles.
(b) Except as specified in the previous subsection, neither LABN nor LA
Bank has a direct or indirect equity or ownership interest which represents 5
percent or more of the aggregate equity or ownership interest of any entity
(including, without limitation, corporations, partnerships, and joint ventures).
(c) Each of LALI and AFSI is a corporation which is duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own and
operate its properties and assets, to lease properties used in its business, and
to carry on its business as now conducted. AFSI is duly registered as a
broker-dealer under each federal or state securities or "blue sky" law, if any,
under which registration is necessary for it to conduct its businesses as
presently conducted. AFSI is duly registered or licensed under each state
insurance law under which registration or licensure is necessary for it to
conduct its businesses as presently conducted. Each of LALI and AFSI owns or
possesses in the operation of its business all other franchises, licenses,
permits, branch certificates, consents, approvals, waivers, and other
authorizations, governmental or otherwise, which are necessary for it to conduct
its business as now conducted, except for those where the failure of such
ownership or possession would not have a Material Adverse Effect on LALI or
AFSI. Each of LALI and AFSI is duly qualified and licensed to do business and is
in good standing in every jurisdiction with respect to which the failure to be
so qualified or licensed could result in a Material Adverse Effect on LALI or
AFSI. Each of LALI and AFSI is not (i) in violation of its charter documents or
bylaws, (ii) in violation of any applicable federal, state, or local law or
ordinance or any order, rule, or regulation of any federal, state, local, or
other governmental agency or body, or (iii) in violation of or in default with
respect to any order, writ, injunction, or decree of any court, or any order,
license, regulation, or demand of any governmental agency, except, in the case
of (ii) or (iii), for such violations or defaults which in the aggregate could
not reasonably be expected to have a Material Adverse Effect on LABN or LA Bank;
and none of LABN, LA Bank, LALI, and AFSI has received any claim or notice of
violation with respect thereto.
(d) When it commences business, Premier (i) will be a limited
partnership duly organized,
16
validly existing, and in good standing under the laws of the Commonwealth of
Pennsylvania and will have all requisite power and authority to own and operate
its properties and assets, to lease properties used in its business, and to
carry on its business as to be conducted, (ii) will be duly registered or
licensed under each state insurance law, if any, under which registration or
licensure will be necessary for it to conduct its businesses as to be conducted,
(iii) will own or possess in the operation of its business all other franchises,
licenses, permits, branch certificates, consents, approvals, waivers, and other
authorizations, governmental or otherwise, which will be necessary for it to
conduct its business as to be conducted, except for those where the failure of
such ownership or possession would not have a Material Adverse Effect on
Premier, (iv) will be duly qualified and licensed to do business and be in good
standing in every jurisdiction with respect to which the failure to be so
qualified or licensed could result in a Material Adverse Effect on Premier, (v)
will not be in violation of its organizational documents or bylaws, and (vi)
will not be in violation of any applicable federal, state, or local law or
ordinance or any order, rule, or regulation of any federal, state, local, or
other governmental agency or body.
6.9. Capital Structure.
(a) The authorized capital stock of LABN consists of (i) 1,000,000
shares of preferred stock, par value $1.25 per share ("LABN Preferred Stock"),
of which, as of the date of this Agreement, no shares are issued or outstanding,
and (ii) 10,000,000 shares of LABN Common Stock, of which, as of the date of
this Agreement, 4,850,753 shares have been duly issued and are validly
outstanding, fully paid, and nonassessable, and held by approximately 1,400
shareholders of record. The aforementioned shares of LABN Preferred Stock and
LABN Common Stock are the only voting securities of LABN authorized, issued, or
outstanding as of such date; and except as set forth on Schedule 6.9 hereof,
there are no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments, or agreements calling for or requiring the
issuance, transfer, sale, or other disposition of any shares of the capital
stock of LABN, or calling for or requiring the issuance of any securities or
rights convertible into or exchangeable for shares of capital stock of LABN. No
shares of LABN Preferred Stock or LABN Common Stock are held as treasury shares.
None of the LABN Common Stock is subject to any restrictions upon the transfer
thereof under the terms of the articles of incorporation or bylaws of LABN.
(b) Schedule 6.9 hereof lists all options to purchase LABN securities
currently outstanding and, for each such option, the date of issuance, date of
exercisability, exercise price, type of security for which exercisable, and date
of expiration. Schedule 6.9 hereof further lists all shares of LABN Preferred
Stock and LABN Common Stock reserved for issuance pursuant to stock option
plans, agreements, or arrangements but not yet issued and all options upon
shares of LABN Preferred Stock and LABN Common Stock designated or made
available for grant but not yet granted.
(c) The authorized capital stock of LA Bank consists of 10,000,000
shares of common stock, $0.21 par value (the "LA Bank Common Stock"), of which,
as of the date of this Agreement, 4,850,753 shares have been duly issued and are
validly outstanding, fully paid, and nonassessable, and all of which are held of
record and beneficially by LABN directly, free and clear of any adverse claims.
The aforementioned shares of LA Bank Common Stock are the only voting securities
of LA Bank
17
authorized, issued, or outstanding as of such date. None of the LA Bank Common
Stock is subject to any restrictions upon the transfer thereof under the terms
of the corporate charter or bylaws of LA Bank or under the terms of any
agreement to which LA Bank is a party or under which it is bound.
(d) None of the shares of LABN Common Stock or LA Bank Common Stock has
been issued in violation of the preemptive rights of any shareholder.
(e) As of the date hereof, to the best of the knowledge of LABN, and
except for this Agreement, there are no shareholder agreements, or other
agreements, understandings, or commitments relating to the right of any holder
or beneficial owner of more than 1 percent of the issued and outstanding shares
of any class of the capital stock of either LABN or LA Bank to vote or to
dispose of his, her or its shares of capital stock of that entity.
(f) The authorized capital stock of LALI consists of 100,000 shares of
common stock, $5.00 par value (the "LALI Common Stock"), of which, as of the
date of this Agreement, 2,000 shares have been duly issued and are validly
outstanding, fully paid, and nonassessable, and all of which are held of record
and beneficially by LA Bank directly, free and clear of any adverse claims. The
aforementioned shares of LALI Common Stock are the only voting securities of
LALI authorized, issued, or outstanding as of such date. None of the LALI Common
Stock is subject to any restrictions upon the transfer thereof under the terms
of the corporate charter or bylaws of LALI or under the terms of any agreement
to which LALI is a party or under which it is bound.
(g) The authorized capital stock of AFSI consists of 10,000 shares of
common stock, no par value (the "AFSI Common Stock"), of which, as of the date
of this Agreement, 100 shares have been duly issued and are validly outstanding,
fully paid, and nonassessable, and all of which are held of record and
beneficially by LA Bank directly, free and clear of any adverse claims. The
aforementioned shares of AFSI Common Stock are the only voting securities of
AFSI authorized, issued, or outstanding as of such date. None of the AFSI Common
Stock is subject to any restrictions upon the transfer thereof under the terms
of the corporate charter or bylaws of AFSI or under the terms of any agreement
to which AFSI is a party or under which it is bound.
6.10. Articles of Incorporation, Bylaws, and Minute Books. The copies of
the certificate or articles of incorporation and all amendments thereto and of
the bylaws, as amended, of LABN, LA Bank, LALI, and AFSI that have been provided
to NBTB are true, correct, and complete copies thereof. The copy of the limited
partnership agreement of Premier that has been provided to NBTB is a true and
correct copy thereof. The minute books of LABN, LA Bank, LALI, and AFSI that
have been made available to NBTB contain accurate minutes of all meetings and
accurate consents in lieu of meetings of the board of directors (and any
committee thereof) and of the shareholders of LABN, LA Bank, LALI, and AFSI
since their respective inceptions. These minute books accurately reflect all
transactions referred to in such minutes and consents in lieu of meetings and
disclose all material corporate actions of the shareholders and boards of
directors of LABN, LA Bank, LALI, and AFSI and all committees thereof. Except as
reflected in such minute books, there are no minutes of meetings or consents in
lieu of meetings of the board of directors (or any committee thereof) or of
shareholders of LABN, LA Bank, LALI, or AFSI.
18
6.11. Books and Records. The books and records of each of LABN, LA Bank,
LALI, and AFSI fairly reflect the transactions to which it is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance in all material respects with
all applicable accounting and legal requirements. Each of LABN, LA Bank, LALI,
and AFSI follows generally accepted accounting principles applied on a
consistent basis in the preparation and maintenance of its books of account and
financial statements.
6.12. Regulatory Approvals and Filings, Contracts, Commitments, etc. LABN
has made available to NBTB:
(a) All regulatory approvals received since January 1, 1992, of LABN
and LA Bank relating to all bank and nonbank acquisitions or the establishment
of de novo operations;
(b) All employment contracts, election contracts, retention contracts,
deferred compensation, non-competition, bonus, stock option, profit-sharing,
pension, retirement, consultation after retirement, incentive, insurance
arrangements or plans (including medical, disability, group life or other
insurance plans), and any other remuneration or fringe benefit arrangements
applicable to employees, officers, or directors of LABN or LA Bank, accompanied
by any agreements, including trust agreements, embodying such contracts, plans,
or arrangements, and all employee manuals and memoranda relating to employment
and benefit policies and practices of any nature whatsoever (whether or not
distributed to employees or any of them), and any actuarial reports and audits
relating to such plans;
(c) All material contracts, agreements, leases, mortgages, and
commitments to which LABN or LA Bank is a party or may be bound; or, if any of
the same be oral, true, accurate, and complete written summaries of all such
oral contracts, agreements, leases, mortgages, and commitments;
(d) All contracts, agreements, leases, mortgages, and commitments,
whether or not material, to which LABN or LA Bank is a party or may be bound and
which require the consent or approval of third parties to the execution and
delivery of this Agreement or to the consummation or performance of any of the
transactions contemplated thereby or, if any of the same be oral, true,
accurate, and complete written summaries of all such oral contracts, agreements,
leases, mortgages, and commitments;
(e) All deeds, leases, contracts, agreements, mortgages, and
commitments, whether or not material, to which LABN or LA Bank is a party or may
be bound and which relate to land, buildings, fixtures, or other real property
upon or within which LABN or LA Bank operates its businesses or is authorized to
operate its businesses, or with respect to which LABN or LA Bank has any
application pending for authorization to operate its businesses;
(f) Any pending application, including any documents or materials
related thereto, which has been filed by LABN or LA Bank with any federal or
state regulatory agency with respect to the establishment of a new office or the
acquisition or establishment of any additional banking or nonbanking subsidiary;
and
19
(g) All federal, state, and local tax returns, including any amended
returns, filed by LABN or LA Bank for the years 1995 through 1997, a copy of the
calculation of the 1998 tax provision made by LABN for the year 1998 as recorded
on its books and records, and a copy of all substantive correspondence or other
documents with respect to any examination that has not yet been resolved, a copy
of the most recent examination from each state or local tax agency if any, for
each of LABN and LA Bank, and a copy of all substantive correspondence or other
documents with respect to any examination that has not yet been resolved, and
all tax rulings, closing agreements, settlement agreements, or similar documents
with respect to LABN or LA Bank received from or entered into with the Internal
Revenue Service (the "IRS") or any other taxing authority since January 1, 1989
or that would have continuing effect after the Effective Time.
6.13. Financial Statements. LABN has furnished to NBTB its consolidated
audited statement of condition as of each of December 31, 1996, December 31,
1997, and December 31, 1998, and its related audited consolidated statement of
income, consolidated statement of cash flows, and consolidated statement of
changes in stockholders' equity for each of the periods then ended, and the
notes thereto, and its consolidated unaudited statement of condition as of June
30, 1999 and its related unaudited consolidated statement of income,
consolidated statement of cash flows, and consolidated statement of changes in
stockholders' equity for the period then ended, and the notes thereto, each as
filed with the SEC (collectively, the "LABN Financial Statements"). All of the
LABN Financial Statements, including the related notes, (a) except as indicated
in the notes thereto, were prepared in accordance with generally accepted
accounting principles consistently applied in all material respects (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), (b) are in accordance with the books and records of LABN and
LA Bank, (c) fairly reflect the consolidated financial position of LABN as of
such dates, and the consolidated results of operations of LABN for the periods
ended on such dates, and do not fail to disclose any material extraordinary or
out-of-period items, and (d) reflect, in accordance with generally accepted
accounting principles consistently applied in all material respects, adequate
provision for, or reserves against, the consolidated loan losses of LABN as of
such dates.
6.14. Call Reports; Bank Holding Company Reports.
(a) LA Bank has made available to NBTB its FFIEC Consolidated Reports
of Condition and Income ("Call Reports") for the calendar quarter dated March
31, 1996 and each calendar quarter thereafter. All of such Call Reports,
including the related schedules and memorandum items, were prepared in
accordance with generally accepted accounting principles consistently applied in
all material respects or, to the extent different from generally accepted
accounting principles, accounting principles mandated by the applicable
instructions to such Call Reports.
(b) No adjustments are required to be made to the equity capital
account of LA Bank as reported on any of the Call Reports referred to in
Subsection 6.14(a) hereof, in any material amount, in order to conform such
equity capital account to equity capital as would be determined in accordance
with generally accepted accounting principles as of such date.
(c) LABN has furnished to NBTB its annual report on Form FR Y-6 as
filed with the Board
20
of Governors as of December 31, 1998 and all amendments and periodic and current
reports filed with the Board of Governors under the BHC Act subsequent to
December 31, 1998.
6.15. Absence of Undisclosed Liabilities. At June 30, 1999, neither LABN
nor LA Bank had any obligation or liability of any nature (whether absolute,
accrued, contingent, or otherwise, and whether due or to become due) which was
material, or which when combined with all similar obligations or liabilities
would have been material, to LABN, except (a) as disclosed in the LABN Financial
Statements, or (b) as set forth on Schedule 6.15 hereof, or (c) for unfunded
loan commitments made by LABN or LA Bank in the ordinary course of their
business consistent with past practice. The amounts set up as current
liabilities for taxes in the LABN Financial Statements are sufficient for the
payment of all federal, state, local and foreign income, payroll, withholding,
excise, sales, use, personal property, use and occupancy, business and
occupation, mercantile, real estate, gross receipts, license, employment,
severance, stamp, premium, windfall profits, social security (or similar
unemployment), disability, transfer, registration, value added, alternative, or
add-on minimum, estimated, or capital stock and franchise tax and other tax of
any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not ("Tax" or "Taxes") accrued in accordance with generally
accepted accounting principles and unpaid at June 30, 1999. Since June 30, 1999,
neither LABN nor LA Bank has incurred or paid any obligation or liability that
would be material (on a consolidated basis) to LABN, except (x) for obligations
incurred or paid in connection with transactions by it in the ordinary course of
its business consistent with past practices, or (y) as set forth on Schedule
6.15 hereof, or (z) as expressly contemplated herein.
6.16. Absence of Certain Developments. Since June 30, 1999, except as set
forth on Schedule 6.16 hereof, there has been (a) no Material Adverse Effect
with respect to LABN and LA Bank, (b) no material deterioration in the quality
of the consolidated loan portfolio of LABN, and no material increase in the
consolidated level of nonperforming assets or non-accrual loans at LABN or in
the level of its consolidated provision for credit losses or its consolidated
reserve for credit losses; (c) no declaration, setting aside, or payment by LABN
or LA Bank of any regular dividend, special dividend, or other distribution with
respect to any class of capital stock of LABN or LA Bank, other than customary
cash dividends paid by LABN whose amounts have not exceeded $0.1025 per calendar
quarter and the intervals between which dividends have not been more frequent
than past practice, and other than customary cash dividends paid by LA Bank
whose amounts have not exceeded past practice and the intervals between which
dividends have not been more frequent than past practice; (d) no repurchase by
LABN of any of its capital stock; (e) no material loss, destruction, or damage
to any material property of LABN or LA Bank, which loss, destruction, or damage
is not covered by insurance; and (f) no material acquisition or disposition of
any asset, nor any material contract outside the ordinary course of business
entered into by LABN or LA Bank nor any substantial amendment or termination of
any material contract outside the ordinary course of business to which LABN or
LA Bank is a party, nor any other transaction by LABN or LA Bank involving an
amount in excess of $50,000 other than for fair value in the ordinary course of
its business. Since June 30, 1999, except as set forth on Schedule 6.16 hereof,
(x) each of LABN and LA Bank has conducted its business only in the ordinary
course of such business and consistent with past practice; (y) LABN, on a
consolidated basis, has maintained the quality of its loan portfolio and that of
each of its major components at approximately the same level as existed at June
30, 1999; and (z) LABN, on a consolidated basis, has administered
21
its investment portfolio pursuant to essentially the same policies and
procedures as existed during 1997 and 1998 and the first six months of 1999, and
has taken no action to lengthen the average maturity of the investment
portfolio, or of any significant category thereof, to any material extent.
6.17. Reserve for Credit Losses. The most recent of the LABN Financial
Statements reflect a consolidated reserve for credit losses that is adequate in
accordance with generally accepted accounting principles to absorb reasonably
anticipated losses in the consolidated loan and lease portfolios of LABN, in
view of the size and character of such portfolios, current economic conditions,
and other pertinent factors. Management reevaluates the adequacy of such reserve
quarterly based on portfolio performance, current economic conditions, and other
factors.
6.18. Tax Matters.
(a) Except as set forth on Schedule 6.18 hereof, all Tax returns and
reports required to be filed by or on behalf of LABN or LA Bank have been timely
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ending on or
before December 31, 1998, and all returns filed are complete and accurate and
properly reflect its Taxes for the periods covered thereby. All Taxes shown or
required to be shown on filed returns have been paid, except for any not yet due
and payable. As of the date hereof, there is no audit examination, deficiency,
or refund litigation or tax claim or any notice of assessment or proposed
assessment by the IRS or any other taxing authority, or any other matter in
controversy with respect to any Taxes that might result in a determination
adverse to LABN or LA Bank, except as reserved against in the LABN Financial
Statements. All Taxes due with respect to completed and settled examinations or
concluded litigation have been properly accrued or paid.
(b) Except as set forth on Schedule 6.18 hereof, neither LABN nor LA
Bank has executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect.
(c) To the extent any Taxes are due from, but have not yet been paid
by, LABN or LA Bank for the period or periods beginning January 1, 1999 or
thereafter through and including the Effective Time, adequate provision on an
estimated basis has been made for the payment of such taxes by establishment of
appropriate tax liability accounts on the monthly financial statements of LABN.
(d) Deferred Taxes of LABN and LA Bank have been provided for in
accordance with generally accepted accounting principles as in effect on the
date of this Agreement.
(e) The deductions of LA Bank for bad debts taken and the reserve of LA
Bank for loan losses for federal income tax purposes at December 31, 1998, were
not greater than the maximum amount permitted under the provisions of section
585 of the Code.
(f) Other than liens arising under the laws of the Commonwealth of
Pennsylvania with respect to Taxes assessed and not yet due and payable, there
are no tax liens on any of the properties
22
or assets of LABN or LA Bank.
(g) LABN and LA Bank (i) have timely filed all information returns or
reports required to be filed with respect to Taxes, including but not limited to
those required by sections 6041, 6041A, 6042, 6045, 6049, 6050H, and 6050J of
the Code, (ii) have properly and timely provided to all persons, other than
taxing authorities, all information reports or other documents (for example,
Form 1099s, Form W-2s, and so forth) required to be provided to such persons
under applicable law, and (iii) have exercised due diligence in obtaining
certified taxpayer identification numbers as required under applicable law.
(h) The taxable year end of LABN for federal income tax purposes is,
and since the inception of LABN has continuously been, December 31.
(i) LABN and LA Bank have in all material respects satisfied all
federal, state, local, and foreign withholding tax requirements including but
not limited to income, social security, and employment tax withholding.
(j) Neither LABN nor LA Bank (i) is, or has been, a member of a group
filing a consolidated, combined, or unitary tax return, other than a group the
common parent of which is or was LABN, or (ii) has any liability for the Taxes
of any person (other than LABN and LA Bank) under Treas. Reg. Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
6.19. Consolidated Net Worth. The consolidated net worth of LABN on the
date of this Agreement, as determined in accordance with generally accepted
accounting principles, is not less than the sum of (a) $35,079,000 and (b) the
proceeds to LABN of the exercise of stock options to purchase shares of LABN
Common Stock since June 30, 1999.
6.20. Examinations. To the extent consistent with law, LABN has heretofore
disclosed to NBTB relevant information contained in the most recent
safety-and-soundness, compliance, Community Reinvestment Act, and other Reports
of Examination with respect to LABN issued by the Board of Governors and the
most recent safety-and-soundness, compliance, Community Reinvestment Act, and
other Reports of Examination with respect to LA Bank issued by the OCC. Such
information so disclosed consists of all material information with respect to
the financial, operational, and legal condition of the entity under examination
which is included in such reports.
6.21. Reports. Since January 1, 1996, each of LABN, LA Bank, LALI, and AFSI
has effected all registrations and filed all reports and statements, together
with any amendments required to be made with respect thereto, which it was
required to effect or file with (a) the Board of Governors, (b) the OCC, (c) the
FDIC, (d) the United States Department of the Treasury, (e) the Department, (e)
the Securities and Exchange Commission, and (f) any other governmental or
regulatory authority or agency having jurisdiction over its operations. Each of
such registrations, reports, and documents, including the financial statements,
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
23
to any material fact or which omits to state any material fact necessary in
order to make the statements contained therein not false or misleading.
6.22. FIRA Compliance and Other Transactions with Affiliates. Except as set
forth on Schedule 6.22 hereof, (a) none of the officers, directors, or
beneficial holders of 5 percent or more of the common stock of LABN or LA Bank
and no person "controlled" (as that term is defined in the Financial
Institutions Regulatory and Interest Rate Control Act of 1978) by LABN or LA
Bank (collectively, "Insiders") has any ongoing material transaction with LABN
or LA Bank on the date of this Agreement; (b) no Insider has any ownership
interest in any business, corporate or otherwise, which is a party to, or in any
property which is the subject of, business arrangements or relationships of any
kind with LABN or LA Bank not in the ordinary course of business; and (c) all
other extensions of credit by LABN or LA Bank to any Insider have heretofore
been disclosed in writing by LABN to NBTB.
6.23. SEC Registered Securities. Other than the LABN Common Stock, no
equity or debt securities of LABN or LA Bank are registered or required to be
registered under the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
6.24. Legal Proceedings. Except as disclosed in the LABN Financial
Statements or as set forth on Schedule 6.24 hereof, there is no claim, action,
suit, arbitration, investigation, or other proceeding pending against LABN, LA
Bank, LALI, or AFSI before any court, governmental agency, authority or
commission, arbitrator, or "impartial mediator" or, to the best of the knowledge
of LABN and LA Bank, threatened or contemplated against or affecting it or its
property, assets, interests, or rights, or any basis therefor of which notice
has been given, which, if adversely determined, would have a Material Adverse
Effect on LABN or which otherwise could prevent, hinder, or delay consummation
of the transactions contemplated by this Agreement.
6.25. Absence of Governmental Proceedings. Except as set forth on Schedule
6.25 hereof, none of LABN, LA Bank, LALI, AFSI, nor Premier is a party defendant
or respondent to any pending legal, equitable, or other proceeding commenced by
any governmental agency and, to the best of the knowledge of LABN and LA Bank,
no such proceeding is threatened.
6.26. Federal Deposit Insurance.
(a) The deposits held by LA Bank are insured within statutory limits by
the Bank Insurance Fund of the FDIC (the "BIF") pursuant to the provisions of
the Federal Deposit Insurance Act, as amended (12 U.S.C. Section 1811 et seq.)
(the "FDI Act"), and LA Bank has paid all assessments and filed all related
reports and statements required under the FDI Act.
(b) LA Bank is a member of and pays insurance assessments to the BIF.
None of the deposits of LA Bank are insured by the Savings Association Insurance
Fund of the FDIC (the "SAIF"), and LA Bank pays no insurance assessments to the
SAIF.
(c) LA Bank has paid all regular premiums and special assessments and
filed all reports required of it under the FDI Act.
24
6.27. Other Insurance. Each of LABN and LA Bank carries insurance with
reputable insurers, including blanket bond coverage, in such amounts as are
reasonable to cover such risks as are customary in relation to the character and
location of its properties and the nature of its businesses. All such policies
of insurance are in full force and effect, and no notice of cancellation has
been received. All premiums to date have been paid in full. Neither LABN nor LA
Bank is in default with respect to any such policy which is material to it.
6.28. Labor Matters.
(a) Neither LABN nor LA Bank is a party to or bound by any collective
bargaining contracts with respect to any employees of LABN or LA Bank. Since
their respective inceptions there has not been, nor to the best of the knowledge
of LABN and LA Bank was there or is there threatened, any strike, slowdown,
picketing, or work stoppage by any union or other group of employees against
LABN or LA Bank or any of its premises, or any other labor trouble or other
occurrence, event, or condition of a similar character. As of the date hereof,
neither LABN nor LA Bank is aware of any attempts to organize a collective
bargaining unit to represent any of its employee groups.
(b) As of the date hereof, each of LABN and LA Bank is, to the best of
its knowledge, in compliance in all material respects with all federal and state
laws, regulations, and orders respecting employment and employment practices
(including Title VII of the Civil Rights Act of 1964), terms and conditions of
employment, and wages and hours; and neither LABN nor LA Bank is engaged in any
unfair labor practice. As of the date hereof, except as set forth on Schedule
6.28 hereof, no dispute exists between LABN or LA Bank and any of its employee
groups regarding any employee organization, wages, hours, or conditions of
employment which would materially interfere with the business or operations of
LABN or LA Bank.
6.29. Employee Benefit Plans.
(a) Schedule 6.29 hereto contains a complete list of all pension,
retirement, stock purchase, stock bonus, stock ownership, stock option,
performance share, stock appreciation right, phantom stock, savings, and
profit-sharing plans, all employment, deferred compensation, consulting, bonus,
and collective bargaining agreements, and group insurance contracts and other
incentive, welfare, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
and vacation plans, contracts, and arrangements and employee benefit plans and
agreements, whether or not subject to ERISA, whether formal or informal, whether
written or oral, whether legally binding or not, under which any current or
former employee of LABN or LA Bank has any present right to future benefits or
payments or under which LABN or LA Bank has any present or future liability
(together, the "LABN Plans").
(b) As to each of the LABN Plans, LABN has made available to NBTB true,
complete, current, and accurate copies of (i) the executed document or documents
governing the plan, including the related trust agreement, insurance policy, and
summary plan description (or other description in the case of an unwritten
plan); (ii) the most recent and prior two years' actuarial and financial report
prepared with respect to the plan if it constitutes a "qualified plan" under
section 401(a) of the Code;
25
(iii) the Forms 5500 with all schedules for the last three years; (iv) all IRS
rulings, determination letters, and any open requests for such rulings and
letters that pertain to the plan; and (v) to the extent they pertain to the
plan, attorneys' responses to auditors' requests for information for the last
three years.
(c) Except for funding obligations and liabilities to the Pension
Benefit Guaranty Corporation ("PBGC") pursuant to section 4007 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), all of which have
been fully paid, neither LABN nor LA Bank has any tax, penalty, or liability
with respect to any LABN Plan under ERISA, the Code, or any other applicable
law, regulation, or ruling. As to each LABN Plan with respect to which a Form
5500 has been filed, no material change has occurred with respect to the matters
covered by the most recent Form 5500 since the date thereof, other than regular
accruals and contributions.
(d) Each LABN Plan intended to be a "qualified plan" under the Code
complies with ERISA and applicable provisions of the Code. Neither LABN nor LA
Bank has any material liability under any LABN Plan which is not reflected on
the LABN Financial Statements (other than such normally unrecorded liabilities
under the Plans for sick leave, holiday, education, bonus, vacation, incentive
compensation, and anniversary awards, provided that such liabilities are not in
any event material). There have not been any "prohibited transactions" with
respect to any LABN Plan within the meaning of section 406 of ERISA or, where
applicable, section 4975 of the Code, nor have there been any "reportable
events" within section 4043 of ERISA nor any accumulated funding deficiency
within section 302 of ERISA or section 402 of the Code. Neither LABN nor LA Bank
nor any entity under common control under section 414(b), (c), or (m) of the
Code has or had any obligation to contribute to any multiemployer plan. As to
each LABN Plan that is subject to Title IV of ERISA, the value of assets of such
LABN Plan is at least equal to the present value of the vested and unvested
accrued benefits in such LABN Plan on a termination and ongoing basis, based
upon applicable PBGC regulations and the actuarial methods and assumptions used
in the most recent actuarial report. Neither LABN nor LA Bank has any obligation
to provide retiree welfare benefits.
(e) No action, claim, or demand of any kind has been brought or
threatened by any potential claimant or representative of such a claimant under
any plan, contract, or arrangement referred to in subsection (a) of this section
6.29, other than routine claims for benefits in the ordinary course, where LABN
or LA Bank may be either (i) liable directly on such action, claim, or demand;
or (ii) obligated to indemnify any person, group of persons, or entity with
respect to such action, claim, or demand which is not fully covered by insurance
maintained with reputable, responsible financial insurers or by a self-insured
plan.
6.30. Compensation. Schedule 6.30 hereto contains a true and correct
statement of the names, relationships with LABN and LA Bank, present rates of
compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal year ended December 31, 1998 of each director, officer, or other
employee of LABN and LA Bank whose aggregate compensation for the fiscal year
ended December 31, 1998 exceeded $60,000 or whose aggregate compensation at
present exceeds the rate of $60,000 per annum. Except as set forth on Schedule
6.30 hereto, since December 31, 1998 neither LABN nor LA Bank has changed the
rate of compensation of any of its directors, officers, employees, agents,
dealers, or
26
distributors, nor has any LABN Plan or program been instituted or amended to
increase benefits thereunder. Except as set forth on Schedule 6.30 hereto, there
is no contract, agreement, plan, arrangement, or understanding covering any
person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by LABN or LA Bank by reason of section 280G
of the Code.
6.31. Fiduciary Activities. Each of LA Bank and AFSI is duly qualified and
registered and in good standing in accordance with the laws of each jurisdiction
in which it is required to so qualify or register as a result of or in
connection with its fiduciary or custodial activities as conducted as of the
date hereof. LA Bank is duly registered under and in compliance with all
requirements of the Investment Advisers Act of 1940 as amended, or is exempt
from registration thereunder and from compliance with the requirements thereof.
Since January 1, 1998, each of LA Bank and AFSI has conducted, and currently is
conducting, all fiduciary and custodial activities in all material respects in
accordance with all applicable law.
6.32. Environmental Liability.
(a) Except as set forth on Schedule 6.32 hereof, neither LABN nor LA
Bank is in violation of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including those arising under
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act, the Federal Clean Air Act, the Toxic Substances Control Act or any state or
local statute, regulation, ordinance, order or decree relating to health, safety
or the environment ("Environmental Laws").
(b) Except as set forth on Schedule 6.32 hereof, neither LABN, LA Bank,
nor, to the best of the knowledge of either of them, any borrower of LABN or of
LA Bank has received notice that it has been identified by the United States
Environmental Protection Agency as a potentially responsible party under CERCLA
with respect to a site listed on the National Priorities List, 40 C.F.R. Part
300 Appendix B, nor has LABN or LA Bank or, to the best of the knowledge of
either of them, any borrower of LABN or of LA Bank received any notification
that any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any hazardous
substances, as defined by 42 U.S.C. Section 9601(14), any "pollutant or
contaminant," as defined by 42 U.S.C. Section 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.
(c) No portion of any real property at any time owned or leased by LABN
or LA Bank (collectively, the "LABN Real Estate") has been used by LABN or LA
Bank for the handling, processing, storage or disposal of Hazardous Substances
in a manner which violates any Environmental Laws and, to the best of the
knowledge of LABN and LA Bank, no underground tank or other underground storage
receptacle for Hazardous Substances is located on any of the LABN Real Estate.
In the course of its activities, neither LABN nor LA Bank has generated or is
generating any hazardous waste on any of the LABN Real Estate in a manner which
violates any Environmental Laws. There has been no past
27
or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping (collectively,
a "Release") of Hazardous Substances by LABN or LA Bank on, upon, or into any of
the LABN Real Estate. In addition, to the best of the knowledge of LABN and LA
Bank, except as set forth on Schedule 6.32 hereof, there have been no such
Releases on, upon, or into any real property in the vicinity of any of the LABN
Real Estate that, through soil or groundwater contamination, may be located on
any of such LABN Real Estate.
(d) With respect to any real property at any time held as collateral
for any outstanding loan by LABN or LA Bank (collectively, the "Collateral Real
Estate"), except as set forth on Schedule 6.32 hereof, neither LABN nor LA Bank
has since January 1, 1988 received notice from any borrower thereof or third
party, and has no knowledge, that such borrower has generated or is generating
any hazardous waste on any of the Collateral Real Estate in a manner which
violates any Environmental Laws or that there has been any Release of Hazardous
Substances by such borrower on, upon, or into any of the Collateral Real Estate,
or that there has been any Release on, upon, or into any real property in the
vicinity of any of the Collateral Real Estate that, through soil or groundwater
contamination, may be located on any of such Collateral Real Estate.
(e) As used in this section 6.32, each of the terms "LABN" and "LA
Bank" includes the applicable entity and any partnership or joint venture in
which it or any of its subsidiaries has an interest.
6.33. Intangible Property. To the best of the knowledge of LABN and LA
Bank, each of LABN, LA Bank, LALI, and AFSI owns or possesses the right, free of
the claims of any third party, to use all material trademarks, service marks,
trade names, copyrights, patents, and licenses currently used by it in the
conduct of its business. To the best of the knowledge of LABN and LA Bank, no
material product or service offered and no material trademark, service xxxx, or
similar right used by LABN, LA Bank, LALI, or AFSI infringes any rights of any
other person, and, as of the date hereof, neither LABN nor LA Bank has received
any written or oral notice of any claim of such infringement.
6.34. Real and Personal Property. Except for property and assets disposed
of in the ordinary course of business, each of LABN, LA Bank, LALI, and AFSI
possesses good and marketable title to and owns, free and clear of any mortgage,
pledge, lien, charge, or other encumbrance or other third party interest of any
nature whatsoever which would materially interfere with the business or
operations of either LABN or LA Bank, its real and personal property and other
assets, including without limitation those properties and assets reflected in
the LABN Financial Statements as of June 30, 1999, or acquired by LABN, LA Bank,
LALI, or AFSI subsequent to the date thereof. The leases pursuant to which LABN,
LA Bank, LALI, and AFSI lease real or personal property as lessee are valid and
effective in accordance with their respective terms; and there is not, under any
such lease, any material existing default or any event which, with the giving of
notice or lapse of time or otherwise, would constitute a material default. The
real and personal property leased by either LABN, LA Bank, LALI, or AFSI as
lessee is free from any adverse claim which would materially interfere with its
business or operation taken as a whole. The material properties and equipment
owned or leased as lessee by LABN, LA Bank, LALI, and AFSI are in normal
operating condition, free from any known defects, except such minor defects as
do not materially interfere with the continued use thereof in the conduct
28
of its normal operations.
6.35. Loans, Leases, and Discounts.
(a) To the best of the knowledge of LABN and LA Bank, each loan, lease,
and discount reflected as an asset of LABN in the LABN Financial Statements as
of June 30, 1999, or acquired since that date, is the legal, valid, and binding
obligation of the obligor named therein, enforceable in accordance with its
terms; and no loan, lease, or discount having an unpaid balance (principal and
accrued interest) in excess of $50,000, and no outstanding letter of credit or
commitment to extend credit having a notional amount in excess of $50,000, is
subject to any asserted defense, offset, or counterclaim known to LABN or LA
Bank.
(b) Except as set forth on Schedule 6.35 hereof, neither LABN nor LA
Bank holds any loans or loan-participation interests purchased from, or
participates in any loans originated by, any person other than LABN or LA Bank.
6.36. Material Contracts. None of LABN, LA Bank, LALI, nor AFSI nor any of
the assets, businesses, or operations of any of them is as of the date hereof a
party to, or is bound or affected by, or receives benefits under any material
agreement, arrangement, or commitment not cancelable by it without penalty,
other than (a) the agreements set forth on Schedule 6.36 hereof, and (b)
agreements, arrangements, or commitments entered into in the ordinary course of
its business consistent with past practice, or, if there has been no past
practice, consistent with prudent banking practices.
6.37. Employment and Severance Arrangements. Schedule 6.37 hereof sets
forth
(a) all employment contracts granted by LABN or LA Bank to any of its
officers, directors, shareholders, consultants, or other management officials
and any officer, director, shareholder, consultant, or management official of
any affiliate providing for increased or accelerated compensation in the event
of a change of control with respect to LABN or LA Bank or any other event
affecting the ownership, control, or management of LABN or LA Bank; and
(b) all employment and severance contracts, agreements, and
arrangements between LABN or LA Bank and any officer, director, consultant, or
other management official of any of them.
6.38. Material Contract Defaults. All contracts, agreements, leases,
mortgages, or commitments referred to in section 6.12(c) hereof are valid and in
full force and effect on the date hereof. As of the date of this Agreement and
as of the Effective Time, neither LABN nor LA Bank is or will be in default in
any material respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which it is a party
or by which its assets, business, or operations may be bound or affected or
under which it or its assets, business, or operations receive benefits; and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a default.
6.39. Capital Expenditures. Except as set forth on Schedule 6.39 hereof,
none of LABN, LA Xxxx,
00
XXXX, XXXX, nor Premier has any outstanding commitments to make capital
expenditures which in the aggregate exceed $50,000.
6.40. Repurchase Agreements. With respect to all agreements pursuant to
which LABN or LA Bank has purchased securities subject to an agreement to
resell, it has a valid, perfected first lien or security interest in the
securities securing the agreement, and the value of the collateral securing each
such agreement equals or exceeds the amount of the debt secured by such
collateral under such agreement.
6.41. Internal Controls; Year 2000 Problem.
(a) Each of LABN and LA Bank maintains internal controls to provide
reasonable assurance to its board of directors and officers that its assets are
safeguarded, its records and reports are prepared in compliance with all
applicable legal and accounting requirements and with its internal policies and
practices, and applicable federal, state, and local laws and regulations are
complied with. These controls extend to the preparation of its financial
statements to provide reasonable assurance that the statements are presented
fairly in conformity with generally accepted accounting principles or, in the
case of LA Bank and to the extent different from generally accepted accounting
principles, accounting principles mandated by the OCC. The controls contain
self-monitoring mechanisms, and appropriate actions are taken on significant
deficiencies as they are identified.
(b) Each of LABN and LA Bank has reviewed the areas within its business
and operations which could be adversely affected by, and has developed or is
developing a program to address on a timely basis the risk that certain computer
applications used by it or by any of its major suppliers may be unable to
recognize and perform properly date-sensitive functions involving dates prior to
and after December 31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem
will not result, and is not reasonably expected to result, in any Material
Adverse Effect on LABN or LA Bank.
6.42. Dividends. Neither LABN nor LA Bank has paid any dividend to its
shareholders which caused its regulatory capital to be less than the amount then
required by applicable law, or which exceeded any other limitation on the
payment of dividends imposed by law, agreement, or regulatory policy.
6.43. Brokers and Advisers. Except as set forth on Schedule 6.43 hereof,
(a) there are no claims for brokerage commissions, finder's fees, or similar
compensation arising out of or due to any act of LABN or LA Bank in connection
with the transactions contemplated by this Agreement or based upon any agreement
or arrangement made by or on behalf of LABN or LA Bank, and (b) neither LABN nor
LA Bank has entered into any agreement or understanding with any party relating
to financial advisory services provided or to be provided with respect to the
transactions contemplated by this Agreement.
6.44. Interest Rate Risk Management Instruments.
(a) Schedule 6.44 contains a true, correct, and complete list of all
interest-rate swaps, caps, floors, and options agreements and other
interest-rate risk management arrangements to which LABN
30
or LA Bank is a party or by which any of its properties or assets may be bound.
(b) All interest rate swaps, caps, floors, and option agreements and
other interest rate risk management arrangements to which LABN or LA Bank is a
party or by which any of its properties or assets may be bound were entered into
in the ordinary course of its business and, to the best of its knowledge, in
accordance with prudent banking practice and applicable rules, regulations, and
regulatory policies and with counterparties believed to be financially
responsible at the time and are legal, valid, and binding obligations
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization, or similar laws affecting
the rights of creditors generally and the availability of equitable remedies),
and are in full force and effect. LABN and LA Bank have duly performed in all
material respects of all of their respective obligations thereunder to the
extent that such obligations to perform have accrued; and to the best of the
knowledge of LABN and LA Bank, there are no breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
6.45. Accounting Treatment. LABN is aware of no reason why the Merger will
fail to qualify for "pooling of interests" accounting treatment.
6.46. COBRA Matters. Schedule 6.46 sets forth the name, address, telephone
number, social security number, and date of Qualifying Event (as defined in
section 603 of ERISA) of each individuals covered under a group health plan that
is subject to section 601 of ERISA and sponsored by LABN or LA Bank or any of
their subsidiaries who have experienced a Qualifying Event since February 16,
1998, together with documentation of compliance by LABN or LA Bank, as the case
may be, with applicable notice requirements.
6.47. Disclosure. No representation or warranty hereunder and no
certificate, statement, or other document delivered by LABN or LA Bank hereunder
or in connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to LABN which reasonably might have a Material Adverse Effect on
LABN or LA Bank which has not been disclosed in the LABN Financial Statements or
a certificate or other document delivered to NBTB by LABN. All copies of
documents delivered to NBTB by LABN under this Agreement are true, correct, and
complete copies thereof and include all amendments, supplements, and
modifications thereto and all waivers thereunder.
6.48. Regulatory and Other Approvals. As of the date hereof, LABN is not
aware of any reason why all material consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement, as shall be necessary for (a) consummation of
the transactions contemplated by this Agreement, and (b) the continuation after
the Effective Time of the business of LABN and LA Bank as such business is
carried on immediately prior to the Effective Time, free of any conditions or
requirements which, in the reasonable opinion of LABN, could have a Material
Adverse Effect on LABN. As of the date hereof, LABN is not aware of any reason
why all material consents and approvals shall not be procured from all other
persons and entities
31
whose consent or approval shall be necessary for (y) consummation of the
transactions contemplated by this Agreement, or (z) the continuation after the
Effective Time of the business of LABN and LA Bank as such business is carried
on immediately prior to the Effective Time.
7. COVENANTS OF LABN.
LABN covenants and agrees as follows:
7.1. Rights of Access. In addition and not in limitation of any other
rights of access provided to NBTB herein, until the Effective Time LABN and LA
Bank will give to NBTB and to its representatives, including its certified
public accountants, KPMG, full access during normal business hours to all of the
property, documents, contracts, books, and records of LABN, LA Bank, LALI, AFSI,
and Premier, and such information with respect to their business affairs and
properties as NBTB from time to time may reasonably request.
7.2. Monthly and Quarterly Financial Statements; Minutes of Meetings and
Other Materials.
(a) LABN and LA Bank will continue to prepare all of the monthly and
quarterly financial statements and financial reports to regulatory authorities
for the months and quarterly periods ending between July 1, 1999 and the
Effective Time which it customarily prepared during the period between January
1, 1996 and June 30, 1999 and shall promptly provide NBTB with copies of all
such financial statements and reports. All of such financial statements and
reports, including the related notes, schedules, and memorandum items, will have
been prepared in accordance with generally accepted accounting principles
consistently applied in all material respects (except that Call Reports may be
prepared in accordance with the official instructions applicable thereto at the
time of filing).
(b) LABN and LA Bank shall promptly provide NBTB with (i) copies of all
of its periodic reports to directors and to shareholders, whether or not such
reports were prepared or distributed in connection with a meeting of the board
of directors or a meeting of the shareholders, prepared or distributed between
the date of this Agreement and the Effective Time, and (ii) complete copies of
all minutes of meetings of its board of directors and shareholders which
meetings take place between the date of this Agreement and the Effective Time,
certified by the secretary or cashier or an assistant secretary or assistant
cashier of LABN or LA Bank, as the case may be.
(c) From the date of this Agreement to the Effective Time, LABN shall,
contemporaneously with its filing with the SEC of any periodic or current report
pursuant to section 13 of the Exchange Act, deliver a copy of such report to
NBTB.
7.3. Extraordinary Transactions. Without the prior written consent of NBTB,
neither LABN nor LA Bank will, on or after the date of this Agreement: (a)
subject to section 7.9, declare or pay any cash dividends or property dividends
with respect to any class of its capital stock, with the exception of (i)
customary periodic cash dividends paid by LABN to holders of its common stock in
amounts not exceeding $0.1025 per calendar quarter and at intervals that are not
shorter than past practice, (ii)
32
customary periodic special cash dividends typically declared by LABN in November
and paid to holders of its common stock the following December, in amounts not
exceeding $0.03 per year and at intervals that are not shorter than past
practice, and (iii) customary cash dividends paid by LA Bank whose amounts have
not exceeded past practice and at intervals that are not shorter than past
practice; (b) declare or distribute any stock dividend, authorize a stock split,
or authorize, issue or make any distribution of its capital stock or any other
securities (except for issuances of LABN Common Stock upon exercise of stock
options outstanding on the date of this Agreement), or grant any options to
acquire such additional securities; (c) either (i) merge into, consolidate with,
or sell or otherwise dispose of its assets to any other corporation or person,
or enter into any other transaction or agree to effect any other transaction not
in the ordinary course of its business except as explicitly contemplated herein,
or (ii) engage in any discussions concerning such a possible transaction except
as explicitly contemplated herein unless the board of directors of LABN, based
upon the advice of Saul, Ewing, Xxxxxx & Xxxx LLP, determines in good faith that
such action is required for the board of directors to comply with its fiduciary
duties to stockholders imposed by law; (d) convert the charter or form of entity
of LA Bank from that in existence on the date of this Agreement to any other
charter or form of entity; (e) make any direct or indirect redemption, purchase,
or other acquisition of any of its capital stock; (f) except in the ordinary
course of its business or to accomplish the transactions contemplated by this
Agreement, incur any liability or obligation, make any commitment or
disbursement, acquire or dispose of any property or asset, make any contract or
agreement, pay or become obligated to pay any legal, accounting, or
miscellaneous other expense, or engage in any transaction; (g) other than in the
ordinary course of business, subject any of its properties or assets to any
lien, claim, charge, option, or encumbrance; (h) enter into or assume any one or
more commitments to make capital expenditures, any of which individually exceeds
$20,000 or which in the aggregate exceed $50,000; (i) except for increases in
the ordinary course of business in accordance with past practices, which
together with all other compensation rate increases do not exceed 4.5 percent
per annum of the aggregate payroll as of June 30, 1999, and except as explicitly
contemplated by this Agreement, increase the rate of compensation of any
employee or enter into any agreement to increase the rate of compensation of any
employee; (j) except as otherwise required by law, create or modify any pension
or profit sharing plan, bonus, deferred compensation, death benefit, or
retirement plan, or the level of benefits under any such plan, nor increase or
decrease any severance or termination pay benefit or any other fringe benefit;
(k) enter into any employment or personal services contract with any person or
firm, including without limitation any contract, agreement, or arrangement
described in section 6.37(a) hereof, except directly to facilitate the
transactions contemplated by this Agreement; nor (l) purchase any loans or
loan-participation interests from, or participate in any loans originated by,
any person other than LABN or LA Bank.
7.4. Preservation of Business. Each of LABN and LA Bank will (a) carry on
its business and that of LALI and AFSI and manage its assets and properties and
those of LALI and AFSI diligently and substantially in the same manner as
heretofore; (b) maintain the ratio of its loans to its deposits at approximately
the same level as existed at June 30, 1999, as adjusted to allow for seasonal
fluctuations of loans and deposits of a kind and amount experienced
traditionally by it; (c) manage its investment portfolio in substantially the
same manner and pursuant to substantially the same investment policies as in
1997 and 1998, and will take no action to change to any material extent the
percentage which its investment portfolio bears to its total assets, or to
lengthen to any material extent the average maturity
33
of its investment portfolio, or of any significant category thereof; (d) use
commercially reasonable efforts to continue in effect its present insurance
coverage on all properties, assets, business, and personnel; (e) use
commercially reasonable efforts to preserve its business organization intact, to
keep available its present employees, and to preserve its present relationships
with customers and others having business dealings with it; (f) not do anything
and not fail to do anything which will cause a breach of or default in any
contract, agreement, commitment, or obligation to which it, LALI, or AFSI is a
party or by which it, LALI, or AFSI may be bound; (g) conduct its affairs so
that at the Effective Time none of its representations and warranties will be
inaccurate, none of its covenants and agreements will be breached, and no
condition in this Agreement will remain unfulfilled by reason of its actions or
omissions; and (h) not amend its articles of incorporation or bylaws and not
permit the amendment of the articles of incorporation or bylaws of LALI or AFSI.
7.5. Comfort Letter. At the time of the effectiveness of the Registration
Statement, but prior to the mailing of the Joint Proxy Statement, and on the
date of the Effective Time, LABN shall furnish NBTB with a letter from
PricewaterhouseCoopers LLP, its independent auditors, in form and substance
acceptable to NBTB, stating that (a) they are independent accountants with
respect to LABN within the meaning of the Securities Act and the published rules
and regulations thereunder, (b) in their opinion the consolidated financial
statements of LABN included in the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the published rules and regulations thereunder, and (c) a
reading of the latest available unaudited consolidated financial statements of
LABN and unaudited financial statements of LA Bank and inquiries of certain
officials of LABN and LA Bank responsible for financial and accounting matters
as to transactions and events since the date of the most recent consolidated
statement of condition included in their most recent audit report with respect
to LABN did not cause them to believe that (i) such latest available unaudited
consolidated financial statements of LABN are not stated on a basis consistent
with that followed in LABN's audited consolidated financial statements; or (ii)
except as disclosed in the letter, at a specified date not more than five
business days prior to the date of such letter, there was any change in LABN's
capital stock or any change in consolidated long-term debt or any decrease in
the consolidated net assets of LABN or the consolidated allowance for loan and
lease losses of LABN as compared with the respective amounts shown in the most
recent LABN audited consolidated financial statements. The letter shall also
cover such other matters pertaining to LABN's and LA Bank's financial data and
statistical information included in the Registration Statement as may reasonably
be requested by NBTB.
7.6. Affiliates' Agreements.
(a) LABN will furnish to NBTB (i) a list of all persons known to LABN
who at the date of this Agreement and (ii) if different from the list required
by section 7.6(a)(i), a list of all persons known to LABN who at the date of
LABN's special meeting of shareholders to vote upon the transactions
contemplated by this Agreement may be deemed to be "affiliates" of LABN within
the meaning of Rule 145 under the Securities Act and for purposes of qualifying
the Merger for "pooling of interests" accounting treatment.
(b) LABN will use commercially reasonable efforts to cause each such
"affiliate" of LABN
34
to deliver to NBTB on or before the date of this Agreement (or, in the case of
any person who becomes an "affiliate" of LABN after the date of this Agreement,
not later than ten days after such person becomes an "affiliate" of LABN) an
Affiliates Agreement.
7.7. Pooling Treatment.
(a) LABN will take no action that would prevent or impede the Merger
from qualifying for "pooling of interests" accounting treatment or KPMG from
delivering the Pooling Letters.
(b) LABN shall deliver to KPMG such certificates or representations as
KPMG may reasonably request to enable it to deliver the Pooling Letters.
7.8. Shareholders' Meeting. LABN shall hold a meeting of its shareholders
in accordance with the BCL as promptly as possible after the effectiveness of
the Registration Statement, after at least twenty days' prior written notice
thereof to the shareholders of LABN, to consider and vote upon the adoption of
this Agreement. Subject to its fiduciary duty to shareholders, the board of
directors of LABN shall approve this Agreement and recommend to its shareholders
that it be adopted.
7.9. Dividend Coordination. The board of directors of LABN shall cause its
regular quarterly dividend record dates and payment dates for LABN Common Stock
to be the same as the regular quarterly dividend record dates and payment dates
for NBTB Common Stock (in particular, by deferring the record date for LABN
Common Stock by up to thirty days beginning in the quarter following the quarter
in which this Agreement is executed), and LABN shall not thereafter change its
regular dividend payment dates and record dates.
7.10. Inconsistent Activities.
(a) Subject to subsection (b) of this section 7.10, unless and until
the Merger has been consummated or this Agreement has been terminated in
accordance with its terms, neither LABN nor LA Bank will (a) solicit or
encourage, directly or indirectly, any inquiries or proposals (each an
"Alternative Proposal") to acquire more than 1 percent of the LABN Common Stock
or any capital stock of LA Bank or any significant portion of the assets of
either of them (whether by tender offer, merger, purchase of assets, or other
transactions of any type) (each an "Alternative Transaction"); (b) afford any
third party which may be considering an Alternative Proposal or Alternative
Transaction access to its properties, books or records except as required by
mandatory provisions of law; (c) enter into any discussions or negotiations for,
or enter into any agreement or understanding which provides for, any Alternative
Transaction, or (d) authorize or permit any of its directors, officers,
employees or agents to do or permit any of the foregoing. If LABN or LA Bank
becomes aware of any Alternative Proposal or of any other matter which could
adversely affect this Agreement or the Merger, LABN and LA Bank shall
immediately give notice thereof to NBTB.
(b) Nothing contained in subsection (a) of this section 7.10 shall
prohibit the board of directors of LABN from furnishing information to or
entering into discussions or negotiations with any person that makes an
unsolicited bona fide Alternative Proposal if, and only to the extent that, (i)
the
35
board of directors of the Company, based upon the advice of Saul, Ewing, Xxxxxx
& Xxxx LLP, determines in good faith that such action is required for the board
of directors to comply with its fiduciary duties to stockholders imposed by law,
(ii) prior to furnishing such information to, or entering into discussions or
negotiations with, such person, LABN provides written notice to NBTB to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person, and (iii) LABN keeps NBTB informed of the status
and all material information with respect to any such discussions or
negotiations.
(c) Nothing in subsection (b) of this section 7.10 shall (i) permit
LABN to terminate this Agreement (except as specifically provided in section
11.1 or 11.2 of this Agreement), (ii) permit LABN or LA Bank to enter into any
agreement with respect to an Alternative Transaction for as long as this
Agreement remains in effect (it being agreed that for as long as this Agreement
remains in effect, LABN and LA Bank shall not enter into any agreement with any
person that provides for, or in any way facilitates, an Alternative Transaction
(other than a confidentiality agreement in customary form)), or (iii) affect any
other obligation of LABN or LA Bank under this Agreement.
7.11. COBRA Obligations. For all individuals covered under a group health
plan that is subject to section 601 of ERISA and sponsored by LABN or LA Bank or
any of their subsidiaries, and who experience a Qualifying Event (as defined in
section 603 of ERISA) within thirty days of the date of this Agreement, LABN or
LA Bank, as the case may be, shall remain responsible for providing all notices
and election forms necessary to comply with ERISA and the Code, and will take
all steps necessary to implement elections pursuant to such notices.
7.12. Updated Schedules. Not less than fifteen business days prior to the
Effective Time and as of the Effective Time, LABN will deliver to NBTB any
updates to the schedules to its representations which may be required to
disclose events or circumstances arising after the date hereof. Such schedules
shall be updated only for the purpose of making the representations and
warranties contained in this Agreement to which such part of such schedules
relate true and correct in all material respects as of the date such schedule is
updated, and the updated schedule shall not have the effect of making any
representation or warranty contained in this Agreement true and correct in all
material respects as of a date prior to the date of such updated schedule. For
purposes of determining whether the condition set forth in section 4.1 to NBTB's
obligations have been met, any such updated schedules delivered to NBTB shall be
disregarded unless NBTB shall have agreed to accept any changes reflected in
such updated schedules.
7.13. Subsequent Events. Until the Effective Time, LABN will immediately
advise NBTB in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by LABN of a covenant contained in this Agreement
impossible or make such performance materially more difficult than in the
absence of such fact or occurrence, or which (if existing and known at the time
of the Effective Time) would cause a condition to NBTB's obligations under this
Agreement not to be fully satisfied.
36
8. REPRESENTATIONS AND WARRANTIES OF NBTB.
NBTB represents and warrants to LABN as follows:
8.1. Organization, Powers, and Qualification. NBTB is a corporation which
is duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own and operate its properties and assets, to lease properties used
in its business, and to carry on its business as now conducted. NBTB owns or
possesses in the operation of its business all franchises, licenses, permits,
branch certificates, consents, approvals, waivers, and other authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now conducted, except for those where the failure of such ownership or
possession would not have a Material Adverse Effect on NBTB. NBTB is duly
qualified and licensed to do business and is in good standing in every
jurisdiction with respect to which the failure to be so qualified or licensed
could result in a Material Adverse Effect on NBTB.
8.2. Execution and Performance of Agreement. NBTB has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its respective terms.
8.3. Binding Obligations; Due Authorization. This Agreement constitutes the
valid, legal, and binding obligations of NBTB enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar law, or by general principles of
equity. The execution, delivery, and performance of this Agreement and the
transactions contemplated thereby have been duly and validly authorized by the
board of directors of NBTB. No other corporate proceedings on its part are
necessary to authorize this Agreement or the carrying out of the transactions
contemplated hereby.
8.4. Absence of Default. None of the execution or the delivery of this
Agreement, the consummation of the transactions contemplated hereby, or the
compliance with or fulfillment of the terms hereof will conflict with, or result
in a breach of any of the terms, conditions, or provisions of, or constitute a
default under the organizational documents or bylaws of NBTB. None of such
execution, consummation, or fulfillment will (a) conflict with, or result in a
material breach of the terms, conditions, or provisions of, or constitute a
material violation, conflict, or default under, or give rise to any right of
termination, cancellation, or acceleration with respect to, or result in the
creation of any lien, charge, or encumbrance upon, any of the property or assets
of NBTB pursuant to any material agreement or instrument under which it is
obligated or by which any of its properties or assets may be bound, including
without limitation any material lease, contract, mortgage, promissory note, deed
of trust, loan, credit arrangement or other commitment or arrangement of it in
respect of which it is an obligor, or (b) if the Merger is approved by the Board
of Governors under the BHC Act, and if the transactions contemplated by this
Agreement are approved by the Department, violate any law, statute, rule, or
regulation of any government or agency to which NBTB is subject and which is
material to its operations, or (c) violate any judgment, order, writ,
injunction, decree, or ruling to which it or any of its properties or assets is
subject or bound. None of the execution or delivery of this Agreement, the
consummation of the transactions contemplated hereby, or the compliance with or
37
fulfillment of the terms hereof will require any authorization, consent,
approval, or exemption by any person which has not been obtained, or any notice
or filing which has not been given or done, other than approval of the
transactions contemplated by this Agreement by, notices to, or filings with by
the Board of Governors, the SEC, state securities commissions, the Department,
the Secretary of State of the State of Delaware, and the Secretary of State of
the Commonwealth of Pennsylvania.
8.5. Capital Structure.
(a) The authorized capital stock of NBTB as of the date of this
Agreement consists of (i) 2,500,000 shares of preferred stock, no par value,
stated value $1.00 per share ("NBTB Preferred Stock"), of which, as of the date
of this Agreement, no shares are issued or outstanding, and (ii) 12,500,000
shares of NBTB Common Stock, of which, as of the date of this Agreement,
12,391,351 shares have been duly issued and are validly outstanding and fully
paid, and 624,438 additional shares are issued and held in the treasury of NBTB.
The aforementioned shares of NBTB Preferred Stock and NBTB Common Stock are the
only voting securities of NBTB authorized, issued, or outstanding as of such
date.
(b) None of the shares of NBTB Common Stock has been issued in
violation of the preemptive rights of any shareholder.
(c) As of the date hereof, to the best of the knowledge of NBTB, and
except for this Agreement, there are no shareholder agreements, or other
agreements, understandings, or commitments relating to the right of any holder
or beneficial owner of more than 1 percent of the issued and outstanding shares
of any class of the capital stock of NBTB to vote or to dispose of his, her or
its shares of capital stock of NBTB.
8.6. Books and Records. The books and records of each of NBTB and NBT Bank
fairly reflect the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly kept
and maintained and are in compliance in all material respects with all
applicable accounting and legal requirements. Each of NBTB and NBT Bank follows
generally accepted accounting principles applied on a consistent basis in the
preparation and maintenance of its books of account and financial statements,
including but not limited to the application of the accrual method of accounting
for interest income on loans, leases, discounts, and investments, interest
expense on deposits and all other liabilities, and all other items of income and
expense. Each of NBTB and NBT Bank has made all accruals in amounts which
accurately report income and expense in the proper periods in accordance with
generally accepted accounting principles. Each of NBTB and NBT Bank has filed
all material reports and returns required by any law or regulation to be filed
by it.
8.7. Financial Statements. NBTB has furnished to LABN its consolidated
audited statement of condition as of each of December 31, 1996, December 31,
1997, and December 31, 1998, and its related audited consolidated statement of
income, consolidated statement of cash flows, and consolidated
38
statement of changes in stockholders' equity for each of the periods then ended,
and the notes thereto, and its consolidated unaudited statement of condition as
of June 30, 1999, and its related unaudited consolidated statement of income,
consolidated statement of cash flows, and consolidated statement of changes in
stockholders' equity for the period then ended, and the notes thereto, each as
filed with the SEC (collectively, the "NBTB Financial Statements"). All of the
NBTB Financial Statements, including the related notes, (a) except as indicated
in the notes thereto, were prepared in accordance with generally accepted
accounting principles consistently applied in all material respects (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), and (b) are in accordance with the books and records of
NBTB, (c) fairly reflect the consolidated financial position of NBTB as of such
dates, and the consolidated results of operations of NBTB for the periods ended
on such dates, and do not fail to disclose any material extraordinary or
out-of-period items, and (d) reflect, in accordance with generally accepted
accounting principles consistently applied in all material respects, adequate
provision for, or reserves against, the consolidated loan losses of NBTB as of
such dates.
8.8. Nasdaq Reporting. Trading of NBTB Common Stock is, as of the date of
this Agreement, reported on the Nasdaq National Market.
8.9. Absence of Certain Developments. Since June 30, 1999, there has been
(a) no Material Adverse Effect with respect to NBTB, and (b) no material
deterioration in the quality of the loan portfolio of NBTB or of any major
component thereof, and no material increase in the level of nonperforming assets
or nonaccrual loans at NBTB or in the level of its provision for credit losses
or its reserve for credit losses.
8.10. Brokers and Advisers. Other than with respect to XxXxxxxxx, Xxxx &
Xxxxxx, Inc., (a) there are no claims for brokerage commissions, finder's fees,
or similar compensation arising out of or due to any act of NBTB in connection
with the transactions contemplated by this Agreement or based upon any agreement
or arrangement made by or on behalf of NBTB, and (b) NBTB has not entered into
any agreement or understanding with any party relating to financial advisory
services provided or to be provided with respect to the transactions
contemplated by this Agreement.
8.11. Disclosure. No representation or warranty hereunder and no
certificate, statement, or other document delivered by NBTB hereunder or in
connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to NBTB which might materially adversely affect its business,
assets, liabilities, financial condition, results of operations, or prospects
which has not been disclosed in the NBTB Financial Statements or a certificate
or other document delivered by NBTB to LABN. Copies of all documents delivered
to LABN by NBTB under this Agreement are true, correct, and complete copies
thereof and include all amendments, supplements, and modifications thereto and
all waivers thereunder.
8.12. Regulatory and Other Approvals. As of the date hereof, NBTB is not
aware of any reason why all material consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement, as shall be necessary for (a) consummation of
the transactions contemplated by this Agreement, and (b) the continuation after
the Effective Time of the business of NBTB as such business is carried on
immediately prior to the Effective Time,
39
free of any conditions or requirements which, in the reasonable opinion of NBTB,
could have a Material Adverse Effect on NBTB. As of the date hereof, NBTB is not
aware of any reason why all material consents and approvals shall not be
procured from all other persons and entities whose consent or approval shall be
necessary for (y) consummation of the transactions contemplated by this
Agreement, or (z) the continuation after the Effective Time of the business of
NBTB as such business is carried on immediately prior to the Effective Time.
9. COVENANTS OF NBTB.
NBTB covenants and agrees as follows:
9.1.Rights of Access. From the date hereof to the Effective Time, NBTB
shall give to LABN and to its representatives, including its certified public
accountants, PricewaterhouseCoopers LLP, full access during normal business
hours to all of the property, documents, contracts, books, and records of NBTB,
and such information with respect to its business affairs and properties as LABN
from time to time may reasonably request.
9.2. Securities Reports. From the date hereof to the Effective Time, NBTB
shall, contemporaneously with the filing with the SEC of any periodic or current
report pursuant to section 13 of the Exchange Act, deliver a copy of such report
to LABN.
9.3. Shareholders' Meeting. NBTB shall hold a meeting of its shareholders
in accordance with the GCL as promptly as possible after the effectiveness of
the Registration Statement, after at least twenty days' prior written notice
thereof to the shareholders of NBTB, to consider and vote upon this Agreement.
Subject to its fiduciary duty to shareholders, the board of directors of NBTB
shall recommend to its shareholders that this Agreement be adopted.
9.4. Nasdaq Approval. NBTB shall use its commercially reasonable efforts to
cause the shares of NBTB Common Stock to be issued in the Merger to be approved
for inclusion on the Nasdaq National Market, subject to official notice of
issuance, prior to the Effective Time.
9.5. Options. At or prior to the Effective Time, NBTB shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of NBTB Common Stock for delivery upon exercise of options to purchase LABN
Common Stock assumed by it in accordance with section 1.9 hereof. NBTB shall use
commercially reasonable efforts to maintain the effectiveness of the
registration statement that pertains to the shares subject to such options (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. NBTB shall at and after the
Effective Time have reserved sufficient shares of NBTB Common Stock for issuance
with respect to such options. NBTB shall also take any action required to be
taken under any applicable state blue sky or securities laws in connection with
the issuance of such shares.
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
40
LABN as they existed immediately prior to the Effective Time to any person who,
on or prior to the Effective Time, was a director or officer of LABN to
indemnification from or against losses, expenses, claims, demands, damages,
liabilities, judgments, fines, penalties, costs, expenses (including without
limitation reasonable attorneys fees) and amounts paid in settlement pertaining
to or incurred in connection with any threatened or actual action, suit, claim,
or proceeding (whether civil, criminal, administrative, arbitration, or
investigative) arising out of events, matters, actions, or omissions occurring
on or prior to the Effective Time. To the extent not provided by the foregoing,
following the Effective Time and to the extent permitted by law, all rights to
such indemnification accorded under the articles of incorporation and by-laws of
LABN to any person who, on or prior to the Effective Time, was a director or
officer of LABN shall survive the Effective Time and, following the Merger, to
the extent permitted by law, NBTB will honor such obligations in accordance with
their terms with respect to events, acts, or omissions occurring prior to the
Effective Time.
9.7. Subsequent Events. Until the Effective Time, NBTB will immediately
advise LABN in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by NBTB of a covenant contained in this Agreement
impossible or make such performance materially more difficult than in the
absence of such fact or occurrence, or which (if existing and known at the time
of the Effective Time) would cause a condition to LABN's obligations under this
Agreement not to be fully satisfied.
10. CLOSING.
10.1. Place and Time of Closing. Closing shall take place at the offices of
NBTB, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx, or such other place as the
parties choose, commencing at 9:00 a.m., local time, on the date of the
Effective Time, provided that all conditions precedent to the obligations of the
parties hereto to close have then been met or waived.
10.2. Events To Take Place at Closing. At the Closing, the following
actions will be taken:
(a) Such certificates and other documents as are required by this
Agreement to be executed and delivered at or prior to the Effective Time and
have not been so executed and delivered, and such other certificates and
documents as are mutually deemed by the parties to be otherwise desirable for
the effectuation of the Closing, will be so executed and delivered; and then
(b) the Merger and the issuance of shares incident thereto shall be
effected; provided, however, that the administrative and ministerial aspects of
the issuance of shares incident to the Merger will be settled as soon thereafter
as shall be reasonable under the circumstances.
41
11. TERMINATION, DAMAGES FOR BREACH, WAIVER, AND AMENDMENT.
11.1. Termination by Reason of Lapse of Time. This Agreement may be
terminated by any party on or after April 15, 2000, by instrument duly
authorized and executed and delivered to the other parties, unless (a) the
Effective Time shall have occurred on or before such date or (b) the failure of
the Effective Time to have occurred on or before such date has been due to the
failure of the party seeking to terminate this Agreement to perform or observe
its covenants and agreements as set forth herein.
11.2. Grounds for Termination. This Agreement may be terminated by written
notice of termination at any time before the Effective Time (whether before or
after action by shareholders of LABN or NBTB):
(a) by mutual consent of the parties hereto;
(b) by NBTB, upon written notice to LABN given at any time (i) if any
of the representations and warranties of LABN contained in section 6 hereof was
materially incorrect when made, or (ii) in the event of a material breach or
material failure by LABN of any covenant or agreement of LABN contained in this
Agreement which has not been, or cannot be, cured within thirty days after
written notice of such breach or failure is given to LABN, and which inaccuracy,
breach, or failure, if continued to the Effective Time, would result in any
condition set forth in section 4 hereof not being satisfied;
(c) by LABN, upon written notice to NBTB given at any time (i) if any
of the representations and warranties of NBTB contained in section 8 hereof was
materially incorrect when made, or (ii) in the event of a material breach or
material failure by NBTB of any covenant or agreement of NBTB contained in this
Agreement which has not been, or cannot be, cured within thirty days after
written notice of such breach or failure is given to NBTB, and which inaccuracy,
breach, or failure, if continued to the Effective Time, would result in any
condition set forth in section 5 hereof not being satisfied or (iii) if the
board of directors of LABN, based upon the advice of Saul, Ewing, Xxxxxx & Xxxx
LLP, determines in good faith that such termination is required for the board of
directors to comply with its fiduciary duties to stockholders imposed by law by
reason of an Alternative Proposal being made; provided that LABN shall notify
NBTB promptly of its intention to terminate this Agreement or enter into a
definitive agreement with respect to any Alternative Proposal, but in no event
shall such notice be given less than 48 hours prior to the public announcement
of LABN's termination of this Agreement;
(d) by LABN, in accordance with the following provisions:
(i) at any time during the three-business-day period beginning
on the Determination Date, if both of the following conditions are satisfied,
subject, however, to subsection 11.2(d)(ii):
(A) The Average Closing Price (determined for
purposes of this section 11.2(d)(i)(A) as if the second sentence of subsection
1.3 were deleted) (the "Modified Average Closing Price") is less than $17.00;
and
42
(B) The number, expressed as a percentage, obtained
by dividing the Modified Average Closing Price by $20.6875 is more than 15
percentage points less than the Index Differential.
(ii) If LABN chooses to exercise its right pursuant to this
section 11.2(d), it shall give immediate written notice thereof to NBTB. During
the three-business-day period commencing with receipt of such notice, NBTB shall
have the option to agree that the Exchange Ratio shall be $17.00 divided by the
Modified Average Closing Price. If NBTB so elects within such three-business-day
period, it shall give immediate written notice thereof to LABN, whereupon no
termination shall have occurred pursuant to this section 11.2(d) and this
Agreement shall remain in effect in accordance with its terms (except that the
Exchange Ratio shall be $17.00 divided by the Modified Average Closing Price).
(iii) Definitions. The following terms used in this section
11.2(d) shall have the meanings set forth in this Subparagraph (iii).
(A) Determination Date. The seventh business day
preceding the Effective Time.
(B) Index Price. For any member of the Index Group,
the Modified Average Closing Price calculated using, instead of NBTB Common
Stock, the common stock of that member of the Index Group.
(C) Index Differential. The sum of the respective
numbers (expressed as percentages), for each of the members of the Index Group,
obtained by multiplying the weighting (as set forth in section 11.2(d)(iii)(D))
of that member of the Index Group times the quotient of the Index Price for that
member of the Index Group divided by the Base Price (as set forth in section
11.2(d)(iii)(D)) for that member of the Index Group.
(D) Index Group. The twenty companies listed below,
the common stock of all of which shall be publicly traded and as to which there
shall not have been a publicly announced proposal between the day before the
date of the execution of this Agreement and the Determination Date for any such
company to be Acquired. In the event that the common stock of any such company
ceases to be publicly traded or a proposal to Acquire that company is announced
between the day before the date of the execution of this Agreement and the
Determination Date, such company will be removed from the Index Group, and the
weights attributed to the remaining companies will be adjusted proportionately
for purposes of determining the Index Price. The twenty companies and the
weights attributed to them are as follows:
43
Company Weighting Base Price
------- --------- ----------
Arrow Financial Corporation, Glens Falls, NY 3.649% $26.2500
BSB Bancorp, Inc., Binghamton, NY 5.947% $26.2500
BT Financial Corporation, Johnstown, PA 7.783% $24.6250
CCBT Bancorp, Inc., Hyannis, MA 3.999% $17.5000
Century Bancorp, Inc., Medford, MA 2.680% $18.5000
Community Bank System, Inc., Xxxxxx, NY 4.841% $24.5000
Community Banks, Inc., Millersburg, PA 3.756% $21.2500
F&M Bancorp, Frederick, MD 6.969% $29.2500
Granite State Bankshares, Inc., Keene, NH 3.546% $23.3750
Harleysville National Corporation, Harleysville, PA 6.583% $35.0000
Independent Bank Corp., Rockland, MA 7.661% $13.3125
National Penn Bancshares, Inc., Boyertown, PA 9.140% $22.2500
Xxxxx Spring Bancorp, Inc., Olney, MD 6.514% $25.5000
Xxxxx Xxxxxxx, Xxx., Xxx Xxxx Xxxx, XX 2.721% $16.5625
Sterling Bancorp, New York, NY 4.221% $19.6875
Suffolk Bancorp, Riverhead, NY 4.119% $27.2500
Sun Bancorp, Inc., Vineland, NJ 3.540% $17.2500
U.S.B. Holding Co., Inc., Orangeburg, NY 6.225% $14.2500
Washington Trust Bancorp, Inc., Westerly, RI 4.442% $16.4375
Yardville National Bancorp, Mercerville, NJ 1.664% $12.7500
--------
100.000%
========
(E) Acquire. A company within the Index Group is deemed to
have been "Acquired" in any combination in which, immediately thereafter, its
equity holders do not control more than 50 percent of the equity of the entity
resulting from the combination;
(e) by either NBTB or LABN upon written notice given to the other if
the board of directors of either NBTB or LABN shall have determined in its sole
judgment made in good faith, after due consideration and consultation with
counsel, that the Merger has become inadvisable or impracticable by reason of
the institution of litigation by the federal government or the government of the
State of New York or the Commonwealth of Pennsylvania to restrain or invalidate
the transactions contemplated by this Agreement;
(f) by either NBTB or LABN upon written notice given to the other if
any of the approvals referred to in section 3.1 are denied and such denial has
become final and nonappealable; or
(g) by either NBTB or LABN upon written notice given to the other if
the shareholders of either NBTB or LABN shall have voted on and failed to adopt
this Agreement, at the meeting of such shareholders called for such purpose.
11.3. Effect of Termination. In the event of the termination and
abandonment hereof pursuant to
44
the provisions of section 11.1 or section 11.2, this Agreement shall become void
and have no force or effect, without any liability on the part of NBTB, LABN, LA
Bank, or their respective directors or officers or shareholders, in respect of
this Agreement. Notwithstanding the foregoing, (a) as provided in section 12.4
of this Agreement, the confidentiality agreement contained in that section shall
survive such termination; (b) the provisions of sections 11.3(b), 11.3(c), 12.1,
and 12.11 shall survive; (c) if such termination is a result of any of the
representations and warranties of a party being materially incorrect when made
or a result of the material breach or material failure by a party of a covenant
or agreement hereunder, such party whose representations and warranties were
materially incorrect or who materially breached or failed to perform its
covenant or agreement shall be liable in the amount of $500,000 to the other
party or parties hereto that are not affiliated with it; and (d) if
(i) such termination is pursuant to section 11.2(c)(iii) of
this Agreement, or if
(ii) this Agreement is terminated for any reason specified in
section 11.2(b)(ii) of this Agreement and a definitive agreement with respect to
an Alternative Proposal is executed by LABN or LA Bank within one year after
such termination, then in either case, and in addition to any amount payable or
paid under subsection (c) of this section 11.3, LABN shall be liable to NBTB for
liquidated damages in the further amount of $3,000,000, which amount will be
payable to NBTB in immediately available funds within two business days after
such amount becomes due. LABN acknowledges that the agreements contained in
subsection (d) of this section 11.3 are an integral part of the transactions
contemplated in this Agreement and that, without these agreements, NBTB would
not enter into this Agreement.
11.4. Waiver of Terms or Conditions. Any of the terms or conditions of this
Agreement, to the extent legally permitted, may be waived at any time prior to
the Effective Time by the party which is, or whose shareholders are, entitled to
the benefit thereof, by action taken by that party (if an individual) or by the
board of directors of such party (if a corporation), or by its chairman, or by
its president; provided that such waiver shall be in writing and shall be taken
only if, in the judgment of the party, board of directors, or officer taking
such action, such waiver will not have a materially adverse effect on the
benefits intended hereunder to it or to the shareholders of its or his
corporation; and the other parties hereto may rely on the delivery of such a
waiver as conclusive evidence of such judgment and the validity of the waiver.
11.5. Amendment. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law, this Agreement and the exhibits
hereto may be amended, supplemented, or interpreted at any time prior to the
Effective Time by written instrument duly authorized and executed by each of the
parties hereto; provided, however, that (except as specifically provided herein
or as may be approved by such shareholders) this Agreement may not be amended
after:
(a) the action by shareholders of LABN in any respect that would change
(i) the amount or kind of shares, obligations, cash, property, or rights to be
received in exchange for or on conversion of the LABN Common Stock; (ii) any
term of the certificate of incorporation of NBTB to be effected by the Merger;
or (iii) any of the terms and conditions of this Agreement if the change would
adversely
45
affect the shareholders of LABN, or
(b) the action by shareholders of NBTB in any respect that would change
(i) the amount or kind of shares, obligations, cash, property, or rights to be
received in exchange for the NBTB Common Stock to be delivered in the Merger;
(ii) any term of the certificate of incorporation of NBTB to be effected by the
Merger; or (iii) any of the terms and conditions of this Agreement if the change
would adversely affect the shareholders of NBTB.
12. GENERAL PROVISIONS.
12.1. Allocation of Costs and Expenses. Except as provided in this section,
each party hereto shall pay its own fees and expenses, including without
limitation the fees and expenses of its own counsel and its own accountants and
tax advisers, incurred in connection with this Agreement and the transactions
contemplated thereby. For purposes of this section, (i) the cost of printing the
Joint Proxy Statement shall be apportioned between NBTB and LABN based upon the
number of copies each shall request to be printed, (ii) the cost of delivering
the Joint Proxy Statement and other material to be transmitted to shareholders
of NBTB shall be deemed to be incurred on behalf of NBTB, (iii) the cost of
delivering the Joint Proxy Statement and other material to be transmitted to
shareholders of LABN shall be deemed to be incurred on behalf of LABN, (iv) the
cost of registering under federal and state securities laws the stock of NBTB to
be received by the shareholders of LABN shall be deemed to be incurred on behalf
of NBTB, and (v) the cost of procuring the tax opinion referred to in section
3.5 of this Agreement shall be deemed to be incurred on behalf of LABN.
12.2. Mutual Cooperation.
(a) Subject to the terms and conditions herein provided, each party
shall use its best efforts, and shall cooperate fully with the other party, in
expeditiously carrying out the provisions of this Agreement and in expeditiously
making all filings and obtaining all necessary governmental approvals, and as
soon as practicable shall execute and deliver, or cause to be executed and
delivered, such governmental notifications and additional documents and
instruments and do or cause to be done all additional things necessary, proper,
or advisable under applicable law to consummate and make effective on the
earliest practicable date the transactions contemplated hereby.
(b) NBTB and LABN shall promptly prepare and file with the SEC the
Joint Proxy Statement, and NBTB shall promptly prepare and file with the SEC the
Registration Statement in which the Joint Proxy Statement will be included as a
prospectus. NBTB and LABN shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Each party will supply in a timely fashion
such information concerning such party as shall be necessary or appropriate for
inclusion in the Joint Proxy Statement and Registration Statement.
12.3. Form of Public Disclosures. NBTB and LABN shall mutually agree in
advance upon the form and substance of all public disclosures concerning this
Agreement and the transactions
46
contemplated hereby.
12.4. Confidentiality. NBTB, LABN, and their respective subsidiaries shall
use all information that each obtains from the other pursuant to this Agreement
solely for the effectuation of the transactions contemplated by this Agreement
or for other purposes consistent with the intent of this Agreement. Neither
NBTB, LABN, nor their respective subsidiaries shall use any of such information
for any other purpose, including, without limitation, the competitive detriment
of any other party. NBTB and LABN shall maintain as strictly confidential all
information each of them learns from the other and shall, at any time after
termination of this Agreement in accordance with the terms thereof, upon the
request of the other, return promptly to it all documentation provided by it or
made available to third parties. Each of the parties may disclose such
information to its respective affiliates, counsel, accountants, tax advisers,
and consultants, provided that such parties are advised of the confidential
nature of such information and agree to be bound by the terms of this section
12.4. The confidentiality agreement contained in this section 12.4 shall remain
operative and in full force and effect, and shall survive the termination of
this Agreement.
12.5. Claims of Brokers.
(a) LABN shall indemnify, defend, and hold NBTB harmless for, from, and
against any claim, suit, liability, fees, or expenses (including, without
limitation, attorneys' fees and costs of court) arising out of any claim for
brokerage commissions, finder's fees, or similar compensation arising out of or
due to any of its acts in connection with the transactions contemplated by this
Agreement or based upon any agreement or arrangement made by it or on its behalf
with respect to NBTB.
(b) NBTB shall indemnify, defend, and hold LABN harmless for, from, and
against any claim, suit, liability, fees, or expenses (including, without
limitation, attorneys' fees and costs of court) arising out of any claim for
brokerage commissions, finder's fees, or similar compensation arising out of or
due to any of its acts in connection with any of the transactions contemplated
by this Agreement or based upon any agreement or arrangement made by it or on
its behalf with respect to LABN.
12.6. Information for Applications and Registration Statement.
(a) Each party represents and warrants that all information concerning
it which is included in any statement and application (including the
Registration Statement) made to any governmental agency in connection with the
transactions contemplated by this Agreement shall not, with respect to such
party, contain an untrue statement of a material fact or omit any material fact
required to be stated therein or necessary to make the statements made, in light
of the circumstances under which they were made, not misleading. The party so
representing and warranting will indemnify, defend, and hold harmless the other,
each of its directors and officers, each underwriter and each person, if any,
who controls the other within the meaning of the Securities Act, for, from and
against any and all losses, claims, suits, damages, expenses, or liabilities to
which any of them may become subject under applicable laws (including, but not
limited to, the Securities Act and the Exchange Act) and rules and regulations
thereunder and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any actions
whether or not resulting in liability,
47
insofar as such losses, claims, damages, expenses, liabilities, or actions arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any such application or statement or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
the representing and warranting party expressly for use therein. Each party
agrees at any time upon the request of the other to furnish to the other a
written letter or statement confirming the accuracy of the information contained
in any proxy statement, registration statement, report, or other application or
statement, and confirming that the information contained in such document was
furnished expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or draft or indicating the information
not furnished expressly for use therein. The indemnity agreement contained in
this section 12.6(a) shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any of the other
parties, and shall survive the termination of this Agreement or the consummation
of the transactions contemplated thereby.
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement contained in section 12.6(a) of
this Agreement is for any reason held by a court of competent jurisdiction to be
unenforceable as to any or every party, then the parties in such circumstances
shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claims asserted) to which any party may be subject in such proportion as the
court of law determines based on the relative fault of the parties.
12.7. Standard of Materiality and of Material Adverse Effect.
(a) For purposes of sections 4, 6, and 7 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of LABN as of
June 30, 1999, as determined in accordance with generally accepted accounting
principles.
(b) For purposes of sections 5, 8, and 9 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of NBTB as of
June 30, 1999, as determined in accordance with generally accepted accounting
principles.
(c) For other purposes and, notwithstanding subsections (a) and (b) of
this section 12.7, when used anywhere in this Agreement with explicit reference
to any of the federal securities laws or to the Proxy Statement or the
Registration Statement, the terms "material" and "materially" shall be construed
and understood in accordance with standards of materiality as judicially
determined under the federal securities laws.
(d) The term "Material Adverse Effect" wherever used in this Agreement
shall mean, with respect to a person, a material adverse effect on the business,
results of operations, financial condition
48
or prospects of such person and its subsidiaries taken as a whole or a material
adverse effect on such person's ability to consummate the transactions
contemplated hereby on a timely basis; provided, that, in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect on the
referenced person the cause of which is (i) any change in banking laws, rules or
regulations of general applicability or interpretations thereof by courts or
governmental authorities, (ii) any change in generally accepted accounting
principles or regulatory accounting requirements applicable to banks or their
holding companies generally, (iii) any action or omission of LABN or any of its
subsidiaries taken with the prior written consent of NBTB, or of NBTB or any of
its subsidiaries taken with the prior written consent of LABN, or (iv) any
changes in general economic conditions affecting banks or their holding
companies.
12.8. Adjustments for Certain Events. Anything in this agreement to the
contrary notwithstanding, all prices per share, share amounts, per-share
amounts, and exchange ratios referred to in this Agreement (including without
limitation section 11.2(d) of this Agreement) shall be appropriately adjusted to
account for stock dividends, split-ups, mergers, recapitalizations,
combinations, conversions, exchanges of shares or the like, but not for normal
and recurring cash dividends declared or paid in a manner consistent with the
established practice of the payer.
12.9. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
12.10. Entire Agreement. This Agreement sets forth the entire understanding
of the parties hereto with respect to their commitments to each other and their
undertakings vis-a-vis each other on the subject matter hereof. Any previous
agreements or understandings among the parties regarding the subject matter
hereof are merged into and superseded by this Agreement. Nothing in this
Agreement express or implied is intended or shall be construed to confer upon or
to give any person, other than NBTB, LABN, and their respective shareholders,
any rights or remedies under or by reason of this Agreement.
12.11. Survival of Representations, Warranties, and Covenants. None of the
representations, warranties, covenants, and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Stock Option
Agreement, the employment agreement described in section 4.8 hereof, and the
change-in-control agreements described in section 5.5 hereof, each of which
shall terminate in accordance with its terms), shall survive the Effective Time,
except for sections 9.6, 12.4, 12.6, and those other covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
12.12. Section Headings. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association,
49
unincorporated organization, or any other entity.
12.13. Notices. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to NBTB:
NBT Bancorp Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
With a required copy to:
Xxxxx X. Xxxxxx, Esq.
Duane, Morris & Heckscher LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
If to LABN or LA Bank:
Lake Ariel Bancorp, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xx. Xxxx X. Xxxxxxxx
Chief Executive Officer
With a required copy to:
Xxxx X. Xxxxx, Esq.
Saul, Ewing, Xxxxxx & Xxxx LLP
Penn National Insurance Xxxxx
Xxx Xxxxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
All such notices shall be deemed to have been given on the date
delivered, transmitted, or mailed in the manner provided above.
50
12.14. Choice of Law and Venue. This Agreement shall be governed
by, construed, and enforced in accordance with the laws of the State of
Delaware, without giving effect to the principles of conflict of law thereof,
except that the BCL (in the case of LABN) shall govern with respect to the terms
and conditions of the Merger, the approval and effectiveness thereof, and the
authorization, cancellation, or issuance of the stock or options of LABN with
respect thereto. The parties hereby designate the Chancery Court in New Castle
County, Delaware to be the proper jurisdiction and venue for any suit or action
arising out of this Agreement. Each of the parties consents to personal
jurisdiction in such venue for such a proceeding and agrees that it may be
served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of Delaware. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
12.15. Knowledge of a Party. References in this Agreement to the
knowledge of a party shall mean the actual knowledge possessed by the present
executive officers of such party.
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: XXXXX X. XXXXXXXX
----------------------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
By: XXXX X. XXXXXXX
----------------------------------------------
Xxxx X. Xxxxxxx
Senior Vice President and Secretary
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LAKE ARIEL BANCORP, INC.
By: XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx
Chief Executive Officer
By: XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Secretary
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)
State of New York )
) ss.
County of Chenango )
)
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On this sixteenth day of August, 1999, before me personally appeared
Xxxxx X. Xxxxxxxx, to me known to be the President and Chief Executive Officer
of NBT Bancorp Inc., and Xxxx X. Xxxxxxx, 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.
XXXXX X. XXXXXXXX
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Notary Public
XXXXX X. XXXXXXXX
Notary Public, State of New York
Xxxxxx County, # 4940256
Commission Expires Aug. 8, 2000
53
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)
Commonwealth of Pennsylvania )
) ss.
County of Lackawanna )
)
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On this sixteenth day of August, 1999, before me personally appeared
Xxxx X. Xxxxxxxx, to me known to be the Chief Executive Officer of Lake Ariel
Bancorp, Inc., and Xxxxxx X. Xxxxxxx, to me known to be the Secretary of Lake
Ariel Bancorp, Inc., and each acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath each stated that he was authorized to execute said
instrument and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
XXXXX XXXXXXX
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Notary Public
Notarial Seal
Xxxxx Xxxxxxx, Notary Public
Xxxxxxxxx Boro, Lackawanna County
My Commission Expires Jan. 10, 2000
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Member, Pennsylvania Association of Notaries
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The undersigned members of the Board of Directors of Lake Ariel
Bancorp, Inc. ("LABN"), acknowledging that NBT Bancorp Inc. ("NBTB") has relied
upon the action heretofore taken by the board of directors in entering into the
Agreement, and has required the same as a prerequisite to NBTB's execution of
the Agreement, do individually and as a group agree, subject to their fiduciary
duties to shareholders, to support the Agreement and to recommend its adoption
by the other shareholders of LABN.
The undersigned do hereby, individually and as a group, until the
Effective Time or termination of the Agreement, further agree to refrain from
soliciting or, subject to their fiduciary duties to shareholders, negotiating or
accepting any offer of merger, consolidation, or acquisition of any of the
shares or all or substantially all of the assets of LABN or LA Bank, National
Association.
XXXXXXX X. XXXXXX XXXXX X. XXXX
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XXXXXXX X. XXXXXXX XXXXX X. XXXXXX
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XXXX X. XXXXXX XXXXXX X. XXXXXXX
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XXXXX X. XXXXXXXXXX XXXX X. XXXXXXXX
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