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The Automatic Dividend Reinvestment and Stock Purchase Plan (the “Plan”) of NBT Bancorp Inc. (“Bancorp”, “us” or “we”) provides an economical and convenient method for Bancorp stockholders to purchase shares of Bancorp Common Stock by reinvesting all or part of their dividends and by making voluntary cash payments to the Plan for investment. Any holder of record of shares of Bancorp Common Stock or Preferred Stock is eligible to participate in the Plan by executing and submitting an Authorization Card. New investors who are not current holders of the Common Stock and/or Preferred Stock can enroll in the Plan by executing and submitting a new investor Enrollment Form.

IF A STOCKHOLDER ELECTS TO PARTICIPATE IN THE PLAN, THE DIVIDENDS ON ALL OR PART OF THE SHARES OF COMMON STOCK AND PREFERRED STOCK REGISTERED IN THAT STOCKHOLDER’S NAME WILL BE REINVESTED TO PURCHASE SHARES OF COMMON STOCK AFTER EACH DIVIDEND PAYMENT DATE (USUALLY EACH MARCH 15, JUNE 15, SEPTEMBER 15 AND DECEMBER 15). STOCKHOLDERS MAY ALSO PURCHASE ADDITIONAL SHARES OF COMMON STOCK BY MAKING VOLUNTARY CASH PAYMENTS AT ANY TIME OF NOT LESS THAN $25 PER MONTH FOR PARTICIPANTS OTHER THAN EMPLOYEES OF BANCORP OR ITS SUBSIDIARIES (NOT LESS THAN $10 PER MONTH FOR PARTICIPANTS WHO ARE EMPLOYEES OF BANCORP OR ITS SUBSIDIARIES) AND NOT MORE THAN $100,000 PER YEAR. VOLUNTARY CASH PAYMENTS WILL BE INVESTED MONTHLY.

SHARES PURCHASED IN THE PLAN WILL BE PURCHASED ON THE OPEN MARKET OR IN NEGOTIATED TRANSACTIONS BY AN AGENT INDEPENDENT OF BANCORP. THE PURCHASE PRICE FOR SHARES PURCHASED ON THE OPEN MARKET OR IN NEGOTIATED TRANSACTIONS WILL BE THE COST OF THE PURCHASE. SHARES OF THE COMMON STOCK ARE TRADED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL “NBTB.”

THE PLAN WILL BE ADMINISTERED BY NBT BANK, NATIONAL ASSOCIATION, A SUBSIDIARY OF BANCORP. THE PLAN DOES NOT REPRESENT A CHANGE IN BANCORP’S DIVIDEND POLICY OR A GUARANTEE OF FUTURE DIVIDENDS. THE PAYMENT OF DIVIDENDS WILL CONTINUE TO DEPEND ON EARNINGS, FINANCIAL REQUIREMENTS, GOVERNMENT REGULATIONS AND OTHER FACTORS.

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This date of this Plan Description is October 22, 2007.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PLAN DESCRIPTION, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PLAN DESCRIPTION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PLAN DESCRIPTION OR AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PLAN DESCRIPTION AT ANY TIME, NOR ANY OFFER OR SOLICITATION MADE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. WHILE INTENDED TO BE AN ACCURATE SUMMARY OF THE NBT BANCORP AUTOMATIC DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN DOCUMENT, ANY DISCREPANCIES OR INCONSISTENCIES BETWEEN THE PLAN DESCRIPTION AND THE PLAN DOCUMENT SHALL BE DECIDED BY THE PLAN DOCUMENT.

TABLE OF CONTENTS

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WHERE YOU CAN FIND MORE INFORMATION 3

CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS 3

NBT BANCORP INC. 3

DESCRIPTION OF THE PLAN 4

Purpose and Advantages 4

Administration 4

Participation 5

Costs 7

Purchases 7

Reports to Participants 9

Certificates for Shares 9

Transfer and Sale 9

Withdrawal 11

Taxes 11

Other Information 12

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). You can read and copy any reports, statements or other information we file at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from commercial document retrieval services and at the web site maintained by the SEC at . In addition, you can read and copy our SEC filings at the offices of the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006-1500. Our Internet address is .

WE WILL FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PLAN DESCRIPTION IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF THAT PERSON, A COPY OF RECENT SEC FILINGS. YOU SHOULD DIRECT YOUR REQUESTS TO: MICHAEL J. CHEWENS, SECRETARY, NBT BANCORP INC., 52 SOUTH BROAD STREET, NORWICH, NY 13815; TELEPHONE (607) 337-2265.

CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS

This document and other documents filed by us with the SEC contain forward-looking statements. These forward looking statements involve risks and uncertainties and are based on the assumptions of the NBT Bancorp and its subsidiaries and on the information available to management at the time that these statements were made. There are a number of factors, many of which are beyond NBT’s control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect the businesses in which NBT is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than NBT; and (7) adverse changes may occur in the securities markets or with respect to inflation. Forward-looking statements speak only as of the date they are made. Except as required by law, NBT does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

NBT BANCORP INC.

NBT Bancorp Inc. is a financial services holding company headquartered in Norwich, New York, with combined assets of $5.2 billion at September 30, 2007. The Company primarily operates through one full-service community bank with three geographic divisions and through a financial services company. NBT Bank, N.A. has 109 locations, including 82 NBT Bank offices in upstate New York and 38 Pennstar Bank offices in northeastern Pennsylvania. NBT also provides financial services related products through NBT.Financial Services, Inc. and Pennstar Financial Services, Inc. More information about NBT’s banking divisions can be obtained on the Internet at and .

ON APRIL 28, 2000, NBT BECAME A FINANCIAL HOLDING COMPANY UNDER THE GRAMM-LEACH-BLILEY FINANCIAL MODERNIZATION ACT OF 1999. WE ARE REGISTERED WITH THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM UNDER THE BANK HOLDING COMPANY ACT OF 1956, AND ARE SUBJECT TO REGULATION AND SUPERVISION BY THE FEDERAL RESERVE BOARD. NBT BANK IS SUBJECT TO REGULATION AND SUPERVISION BY THE OFFICE OF THE COMPTROLLER OF THE CURRENCY.

OUR PRINCIPAL EXECUTIVE OFFICES ARE LOCATED AT 52 SOUTH BROAD STREET, NORWICH, NEW YORK 13815, AND OUR TELEPHONE NUMBER IS (800) 628-2265.

DESCRIPTION OF THE PLAN

Purpose and Advantages

WHAT IS THE PURPOSE OF THE PLAN?

The purpose of the Plan is to provide Bancorp stockholders with a simple and convenient method of investing cash dividends and voluntary cash payments in shares of Common Stock without payment of most transaction fees.

WHAT ARE THE ADVANTAGES OF THE PLAN?

PARTICIPANTS IN THE PLAN WILL HAVE CASH DIVIDENDS ON ALL OR PART OF THEIR SHARES OF COMMON STOCK AND PREFERRED STOCK AUTOMATICALLY REINVESTED IN SHARES OF COMMON STOCK AND WILL HAVE ADDITIONAL AMOUNTS OF VOLUNTARY CASH PAYMENTS AUTOMATICALLY INVESTED IN SHARES OF COMMON STOCK. A PARTICIPANT’S FUNDS ARE FULLY INVESTED IN COMMON STOCK THROUGH THE PURCHASE OF WHOLE SHARES AND FRACTIONAL SHARES. QUARTERLY STATEMENTS OF ACCOUNT PROVIDE PARTICIPANTS WITH A RECORD OF EACH TRANSACTION, SIMPLIFYING RECORD KEEPING. PARTICIPANTS MAY ALSO DEPOSIT COMMON STOCK CERTIFICATES THAT THEY PRESENTLY HOLD, AT NO COST, FOR CREDIT TO THEIR ACCOUNTS THROUGH THE PLAN FOR SAFEKEEPING.

ADMINISTRATION

WHO ARE THE PLAN ADMINISTRATOR AND AGENT AND WHAT ARE THEIR FUNCTIONS?

NBT BANK IS CURRENTLY THE PLAN ADMINISTRATOR. NBT BANK OR ANY SUCCESSOR PLAN ADMINISTRATOR IS REFERRED TO IN THIS PLAN DESCRIPTION AS THE “PLAN ADMINISTRATOR”.

THE PLAN ADMINISTRATOR COLLECTS DIVIDEND PAYMENTS ON PARTICIPANTS’ SHARES AND VOLUNTARY CASH PAYMENTS, AND TRANSFERS THOSE AMOUNTS TO THE AGENT FOR THE PURCHASE OF SHARES OF COMMON STOCK FOR THE PLAN. THE PLAN ADMINISTRATOR ALSO KEEPS RECORDS, SENDS STATEMENTS OF ACCOUNT TO PARTICIPANTS (SEE QUESTION 18) AND PERFORMS OTHER DUTIES RELATING TO THE PLAN. SHARES OF COMMON STOCK PURCHASED UNDER THE PLAN ARE REGISTERED IN THE NAME OF THE PLAN ADMINISTRATOR OR ITS NOMINEE AND ARE CREDITED TO THE ACCOUNTS OF THE PARTICIPANTS IN THE PLAN.

THE AGENT WILL BE A LICENSED BROKER OR A FINANCIAL INSTITUTION, INDEPENDENT OF BANCORP, WHO IS SELECTED FROM TIME TO TIME AT THE DISCRETION OF THE PLAN ADMINISTRATOR AND NBT BANCORP TO RECEIVE PARTICIPANTS’ DIVIDENDS AND VOLUNTARY CASH PAYMENTS FROM THE PLAN ADMINISTRATOR AND APPLY THOSE AMOUNTS TO THE PURCHASE OF ADDITIONAL SHARES OF COMMON STOCK IN OPEN MARKET TRANSACTIONS OR IN NEGOTIATED TRANSACTIONS, AND TO SELL SHARES OF COMMON STOCK THAT PARTICIPANTS ELECT TO HAVE THE AGENT SELL.

PARTICIPATION

WHO IS ELIGIBLE TO PARTICIPATE?

ALL HOLDERS OF RECORD OF SHARES OF COMMON STOCK OR PREFERRED STOCK ARE ELIGIBLE TO PARTICIPATE IN THE PLAN AFTER COMPLETING THE ENROLLMENT PROCEDURES DESCRIBED BELOW, PROVIDED THAT, IN THE CASE OF CITIZENS OR RESIDENTS OF A COUNTRY OTHER THAN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS, PARTICIPATION WOULD NOT VIOLATE LOCAL LAWS APPLICABLE TO BANCORP, THE PLAN AND THE PARTICIPANT. A HOLDER OF RECORD IS A STOCKHOLDER WHOSE SHARES ARE REGISTERED IN THE STOCKHOLDER’S OWN NAME. TO PARTICIPATE IN THE PLAN, STOCKHOLDERS WHOSE SHARES ARE REGISTERED IN OTHER NAMES (FOR INSTANCE, IN THE NAME OF A BROKER OR A NOMINEE) MUST FIRST BECOME HOLDERS OF RECORD OF SUCH SHARES BY HAVING THOSE SHARES TRANSFERRED INTO THEIR OWN NAMES. NEW INVESTORS WHO ARE RESIDENTS OF THE UNITED STATES ARE ALSO ELIGIBLE TO PARTICIPATE IN THE PLAN

A STOCKHOLDER MAY PARTICIPATE IN THE PLAN WITH RESPECT TO ALL OR ANY PART OF THE SHARES OF COMMON STOCK AND PREFERRED STOCK REGISTERED IN THE STOCKHOLDER’S NAME. STOCKHOLDERS WHO WISH TO PARTICIPATE IN THE PLAN WITH RESPECT TO LESS THAN ALL OF THE SHARES REGISTERED IN THE STOCKHOLDER’S NAME MUST SPECIFY UPON ENROLLMENT THE NUMBER OF SHARES OF COMMON STOCK OR PREFERRED STOCK THE STOCKHOLDER WISHES TO ENROLL IN THE PLAN.

HOW DOES A STOCKHOLDER PARTICIPATE?

A HOLDER OF RECORD OF COMMON STOCK OR PREFERRED STOCK MAY JOIN THE PLAN AT ANY TIME BY SIGNING AN AUTHORIZATION CARD (“AUTHORIZATION CARD”) AND RETURNING IT TO THE PLAN ADMINISTRATOR. STOCKHOLDERS SHOULD SIGN THEIR NAME(S) ON THE AUTHORIZATION CARD EXACTLY AS THEY APPEAR ON THEIR STOCK CERTIFICATES. AN AUTHORIZATION CARD IS ENCLOSED WITH THIS PLAN DESCRIPTION AND ADDITIONAL CARDS MAY BE OBTAINED BY REQUESTING THEM FROM THE PLAN ADMINISTRATOR, AS FOLLOWS: NBT BANK, NATIONAL ASSOCIATION, 24 CHURCH STREET, CANAJOHARIE, NEW YORK 13317, ATTENTION: TRANSFER AGENT, TELEPHONE: (518) 673-3243 X1243, E-MAIL: CUSTOMERSERVICE@.

WHAT DOES THE AUTHORIZATION CARD PROVIDE?

THE AUTHORIZATION CARD REQUESTS THAT THE STOCKHOLDER SPECIFY THE NUMBER OF SHARES OF COMMON STOCK OR PREFERRED STOCK THE STOCKHOLDER WISHES TO ENROLL IN THE PLAN. IT DIRECTS THE PLAN ADMINISTRATOR TO APPLY ALL OF THE PARTICIPANT’S CASH DIVIDENDS ON THE SPECIFIED SHARES, AS WELL AS ON ALL SHARES OF COMMON STOCK CREDITED TO THE PARTICIPANT’S ACCOUNT UNDER THE PLAN, AND ANY VOLUNTARY CASH PAYMENTS MADE TO THE PLAN BY THE PARTICIPANT, TO THE PURCHASE OF SHARES OF COMMON STOCK. PARTICIPANTS MAY CHANGE THE NUMBER OF SHARES ENROLLED IN THE PLAN BY NOTIFYING THE PLAN ADMINISTRATOR OF THE CHANGE IN WRITING.

1. 7. HOW DOES A NEW INVESTOR PARTICIPATE ?

New investors who are not current holders of the Common Stock and/or Preferred Stock can enroll in the Plan by executing a new investor Enrollment Form and returning the form to the Plan Administrator, along with an initial investment check for no less than $25.00, but no more than $100,000, payable to the Plan Administrator. An Enrollment Form is enclosed with this Plan Description and additional forms may be obtained by requesting them from the Plan Administrator, as follows: NBT Bank, National Association, 20 Mohawk Street , Canajoharie, New York, 13317 Attention: Transfer Agent, Telephone: (518) 673-3243 x1243, e-mail: customerservice@.

2. 8. WHAT DOES THE ENROLLMENT FORM PROVIDE ?

The enrollment form contains identifying information about a new investor and authorizes Bancorp to establish an account for the investor. The enrollment form requests that the new investor specify the number of shares of Common Stock or Preferred Stock the investor wishes to enroll in the Plan. It directs the Plan Administrator to apply all of the Participant’s cash dividends on the specified shares, as well as on all shares of Common Stock credited to the Participant’s account under the Plan, and any voluntary cash payments made to the Plan by the Participant, to the purchase of shares of Common Stock. Participants may change the number of shares enrolled in the Plan by notifying the Plan Administrator of the change in writing.

a) 9. When will the reinvestment of dividends start ?

Investment of dividends will commence after an Authorization Card or Enrollment Form is received by the Plan Administrator. If a properly executed Authorization Card or Enrollment Form is received by the Plan Administrator prior to the record date for the payment of a dividend, reinvestment will commence with that dividend. If an Authorization Card or Enrollment Form is received on or after that record date, the dividend for that particular record date will be sent directly to the stockholder of record, and the reinvestment of dividends for that Participant will commence with the next succeeding dividend.

STOCKHOLDERS ARE CAUTIONED THAT NEITHER THE PLAN NOR THIS PLAN DESCRIPTION REPRESENTS A CHANGE IN BANCORP’S DIVIDEND POLICY OR A GUARANTEE OF FUTURE DIVIDENDS. THE PAYMENT OF DIVIDENDS ON THE COMMON STOCK (AND, IF ANY SHOULD BE ISSUED IN THE FUTURE, ON THE PREFERRED STOCK) WILL CONTINUE TO DEPEND UPON BANCORP’S EARNINGS, FINANCIAL REQUIREMENTS, GOVERNMENTAL REGULATIONS AND OTHER FACTORS.

10. ARE PLAN PARTICIPANTS REQUIRED TO SEND IN A NEW AUTHORIZATION CARD ANNUALLY?

No. A stockholder enrolled in the Plan will continue to be enrolled in the Plan without further action on his or her part, unless the Participant gives notice to the Plan Administrator in writing that he or she wishes to withdraw from participation. (See Questions 24 – 27 for information concerning withdrawal from the Plan.)

11. MAY A PARTICIPANT MAKE ANY VOLUNTARY CASH PAYMENTS UNDER THE PLAN?

Yes. A Participant may make voluntary cash payments to the Plan Administrator at any time. Voluntary cash payments received by the Plan Administrator will be credited to the Participant’s account in the Plan.

VOLUNTARY CASH PAYMENTS RECEIVED BY THE PLAN ADMINISTRATOR FROM A PARTICIPANT PRIOR TO A TRANSFER DATE WILL BE INVESTED EACH MONTH TO PURCHASE SHARES OF COMMON STOCK. (SEE QUESTION 15 FOR MORE INFORMATION CONCERNING TRANSFER DATES.)

INTEREST WILL NOT BE PAID BY BANCORP, THE PLAN ADMINISTRATOR, OR THE AGENT ON ANY VOLUNTARY CASH PAYMENTS OR OTHER FUNDS HELD PENDING INVESTMENT UNDER THE PLAN. WE SUGGEST THAT A PARTICIPANT SEND ANY VOLUNTARY CASH PAYMENT SO THAT IT REACHES THE PLAN ADMINISTRATOR AS CLOSE AS POSSIBLE BUT PRIOR TO THE TRANSFER DATE. A PARTICIPANT SHOULD BE AWARE OF POSSIBLE DELAYS IN THE MAIL IF PAYMENT IS TO BE DELIVERED IN THAT MANNER.

THE OPTION TO MAKE CASH PAYMENTS BY CHECK OR MONEY ORDER IS AVAILABLE TO PARTICIPANTS EACH MONTH. A VOLUNTARY CASH PAYMENT MAY BE MADE BY A PARTICIPANT WHEN ENROLLING BY ENCLOSING A CHECK OR MONEY ORDER (MADE PAYABLE TO “NBT BANK, N.A.”) WITH THE AUTHORIZATION CARD. THEREAFTER, VOLUNTARY CASH PAYMENTS MAY BE MADE BY SENDING TO THE PLAN ADMINISTRATOR A CHECK FOR THE AMOUNT OF SUCH VOLUNTARY CASH PAYMENT ALONG WITH EITHER THE CASH PAYMENT TEAR-OFF STUB ATTACHED TO EACH PARTICIPANT’S STATEMENT OF ACCOUNT OR A TRANSACTION REQUEST FORM (WHICH MAY BE OBTAINED FROM THE PLAN ADMINISTRATOR).

IN THE FUTURE, WE MAY ALSO ALLOW PARTICIPANTS TO MAKE VOLUNTARY CASH PAYMENTS BY MEANS OF REGULAR AUTOMATIC ELECTRONIC FUNDS TRANSFERS FROM A PREDESIGNATED BANK ACCOUNT. IF WE DECIDE TO ALLOW AUTOMATIC DEDUCTIONS, WE WILL INFORM PARTICIPANTS OF HOW TO INITIATE AUTOMATIC DEDUCTIONS, HOW THE AUTOMATIC DEDUCTION FEATURE WILL OPERATE, AND WHETHER ANY FEES WILL APPLY.

THIRD PARTY CHECKS OR CHECKS NOT DRAWN ON A UNITED STATES BANK AND PAYABLE IN UNITED STATES DOLLARS WILL BE RETURNED TO THE PARTICIPANT. USE OF THE TEAR-OFF STUB WILL HELP EXPEDITE PROCESSING OF VOLUNTARY CASH PAYMENTS. CHECKS NOT ACCOMPANIED BY A TEAR-OFF STUB, AUTHORIZATION CARD OR OTHER INSTRUCTIONS WILL ALSO BE RETURNED. THERE WILL BE A FEE FOR RETURNED CHECKS OR FAILED AUTOMATIC DEDUCTIONS IN ACCORDANCE WITH THE PLAN ADMINISTRATOR’S NORMAL FEE SCHEDULE.

PARTICIPANTS IN THE PLAN WHO ARE ALSO EMPLOYEES OF BANCORP OR ITS SUBSIDIARIES MAY ARRANGE WITH THEIR EMPLOYER TO MAKE VOLUNTARY CASH PAYMENTS BY REGULAR PAYROLL DEDUCTIONS. ACCUMULATED PAYROLL DEDUCTIONS WILL BE REMITTED BY THE EMPLOYER TO THE PLAN ADMINISTRATOR MONTHLY FOR CREDIT TO THE INDIVIDUAL PARTICIPANTS’ ACCOUNTS IN THE PLAN.

VOLUNTARY CASH PAYMENTS BY A PARTICIPANT BY CHECK, MONEY ORDER OR AUTOMATIC DEDUCTION CANNOT BE LESS THAN $25 PER MONTH FOR PARTICIPANTS OTHER THAN EMPLOYEES OF BANCORP OR ITS SUBSIDIARIES AND $10 PER MONTH FOR PARTICIPANTS WHO ARE EMPLOYEES OF BANCORP OR ITS SUBSIDIARIES. THE SAME AMOUNT NEED NOT BE SENT EACH MONTH, AND THERE IS NO OBLIGATION TO MAKE A VOLUNTARY CASH PAYMENT EACH MONTH OR AT ANY TIME. THERE IS A MAXIMUM LIMIT ON THE AMOUNT OF VOLUNTARY CASH PURCHASES OF $100,000 PER YEAR. IF THE PLAN ADMINISTRATOR RECEIVES PAYMENTS FROM A PARTICIPANT TOTALING MORE THAN $100,000 IN A YEAR, THE AMOUNT BY WHICH THE PAYMENTS EXCEED $100,000 WILL BE RETURNED TO THE PARTICIPANT.

COSTS

b) 12. ARE THERE ANY EXPENSES TO PARTICIPANTS IN CONNECTION WITH THE PLAN ?

The costs of administering the plan will be paid by Bancorp. Participants will not incur any charges for joining the Plan. In addition, there are no charges to the Participants for the custodial and safekeeping services provided by the Plan Administrator. Your own bank may impose fees on you if you make voluntary cash payments through their automatic deduction feature, if offered.

ANY SERVICE CHARGES OR TRANSACTIONAL CHARGES INCURRED BY THE AGENT FOR PURCHASES MADE UNDER THE PLAN WILL BE PAID BY BANCORP. HOWEVER, A PARTICIPANT MAY INCUR BROKERAGE CHARGES, ADMINISTRATIVE FEES, TRANSFER TAXES, AND OTHER COSTS OF SALE IF HE OR SHE ELECTS TO SELL SHARES CREDITED TO HIS OR HER ACCOUNT IN THE PLAN, EITHER UPON WITHDRAWAL OR OTHERWISE. (SEE QUESTION 23.)

PURCHASES

1. WHAT IS THE SOURCE OF COMMON STOCK PURCHASED UNDER THE PLAN ?

Shares of Common Stock will be purchased with reinvested dividends and voluntary cash payments, by the Agent either in open market transactions or negotiated transactions.

2. How many shares of Common Stock will be purchased for a Participant ?

The number of shares to be purchased for each Participant on the Transfer Date will depend on the amount of the Participant’s dividends and voluntary cash payments to be invested and the purchase price of the Common Stock. Each Participant’s account will be credited as of each Transfer Date with that number of shares, including fractions computed to three decimal places, equal to the total amount to be invested on behalf of that Participant on that date divided by the purchase price of the Common Stock. The purchase price is determined as described in the answer to Question 16.

WHEN WILL PURCHASES BE MADE UNDER THE PLAN?

THE PLAN ADMINISTRATOR WILL TRANSFER THE TOTAL AMOUNT OF DIVIDENDS PAYABLE ON THE SHARES SUBJECT TO DIVIDEND REINVESTMENT UNDER THE PLAN AND THE TOTAL AMOUNT OF VOLUNTARY CASH PAYMENTS HELD BY THE PLAN ADMINISTRATOR TO THE AGENT FOR THE PURCHASE OF ADDITIONAL SHARES OF COMMON STOCK FOR USE IN THE PLAN. THE TRANSFER WILL OCCUR AS SOON AS PRACTICABLE AFTER DIVIDENDS ARE PAID AND, WITH RESPECT TO VOLUNTARY CASH PAYMENTS, AS SOON AS PRACTICABLE AFTER THE 15TH OF EACH MONTH (THE “TRANSFER DATE”). DIVIDENDS ARE USUALLY PAID ON MARCH 15, JUNE 15, SEPTEMBER 15 AND DECEMBER 15 OF EACH YEAR. IF SUCH FUNDS ARE TRANSFERRED TO THE AGENT, THE AGENT WILL NORMALLY BEGIN PURCHASING SHARES OF COMMON STOCK AS SOON AS PRACTICABLE THEREAFTER AND WILL COMPLETE THE PURCHASES WITHIN 30 DAYS. HOWEVER, IN PURCHASING SHARES ON THE OPEN MARKET OR IN NEGOTIATED TRANSACTIONS, THE AGENT, CONSISTENT WITH APPLICABLE SECURITIES LAWS AND REGULATIONS, WILL HAVE ABSOLUTE DISCRETION TO DETERMINE THE VOLUME, TIMING AND PRICE OF SUCH PURCHASES, EXCEPT THAT THE PRICE IN A NEGOTIATED TRANSACTION MAY NOT EXCEED THE THEN CURRENT BEST OFFER FOR COMMON STOCK IN THE NASDAQ NATIONAL MARKET. NEITHER BANCORP NOR ANY PARTICIPANT WILL HAVE ANY AUTHORITY OR POWER TO DIRECT THE TIME OR PRICE AT WHICH SUCH SHARES WILL BE PURCHASED OR THE SELECTION OF THE BROKER OR DEALER THROUGH OR FROM WHOM SUCH PURCHASES WILL BE MADE. ANY FUNDS NOT INVESTED WITHIN 30 DAYS OF THE TRANSFER DATE WILL BE REFUNDED.

WHAT WILL BE THE PRICE OF SHARES PURCHASED UNDER THE PLAN?

THE PRICE AT WHICH THE AGENT WILL BE DEEMED TO HAVE ACQUIRED SUCH SHARES FOR A PARTICIPANT’S ACCOUNT WILL BE THE AVERAGE OF ALL THE SHARES PURCHASED BY THE AGENT WITH THE REINVESTED DIVIDENDS AND VOLUNTARY CASH PAYMENTS. SUCH SHARES MAY BE PURCHASED IN ANY SECURITIES MARKET WHERE THEY ARE TRADED (PRESENTLY THE NASDAQ NATIONAL MARKET) OR IN NEGOTIATED TRANSACTIONS.

IN MAKING PURCHASES OF COMMON STOCK, THE PLAN ADMINISTRATOR AND THE AGENT MAY COMMINGLE THE PARTICIPANT’S FUNDS (REINVESTED DIVIDENDS AND VOLUNTARY CASH PAYMENTS) WITH THOSE OF OTHER PARTICIPANTS. NEITHER BANCORP NOR THE PLAN ADMINISTRATOR OR THE AGENT SHALL HAVE RESPONSIBILITY AS TO THE VALUE OF THE COMMON STOCK ACQUIRED FOR THE PARTICIPANT’S ACCOUNT.

WILL PARTICIPANTS BE CREDITED WITH DIVIDENDS ON SHARES HELD IN THEIR PLAN ACCOUNTS?

YES. DIVIDENDS WILL BE CREDITED ON FULL SHARES AND FRACTIONAL SHARES HELD IN A PARTICIPANT’S ACCOUNT. DIVIDENDS SO CREDITED WILL BE REINVESTED IN ADDITIONAL SHARES AND CREDITED TO A PARTICIPANT’S ACCOUNT.

REPORTS TO PARTICIPANTS

WHAT KIND OF REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?

EACH PARTICIPANT IN THE PLAN WILL RECEIVE A STATEMENT OF ACCOUNT EACH MONTH IN WHICH THERE IS ACTIVITY IN THE PARTICIPANTS’ ACCOUNT (I.E., AFTER EACH DIVIDEND PAYMENT DATE AND AFTER ANY MONTH IN WHICH VOLUNTARY CASH PAYMENTS ARE INVESTED). THE STATEMENT WILL INFORM THE PARTICIPANT OF THE ACCOUNT TRANSACTIONS THAT HAVE TAKEN PLACE, SETTING FORTH THE AMOUNT OF DIVIDENDS RECEIVED, THE AMOUNTS OF VOLUNTARY CASH PAYMENTS RECEIVED, THE NUMBER OF SHARES PURCHASED, THE PURCHASE DATE AND PRICE, THE TOTAL NUMBER OF SHARES HELD IN THE PARTICIPANT’S ACCOUNT AND ALL YEAR-TO-DATE TRANSACTIONS IN THE PARTICIPANT’S ACCOUNT. THESE STATEMENTS ARE A PARTICIPANT’S RECORD OF THE COSTS OF HIS OR HER PURCHASES AND SHOULD BE RETAINED FOR INCOME TAX PURPOSES. PAST STATEMENTS WILL BE PROVIDED TO PARTICIPANTS UPON REQUEST. A REASONABLE FEE MAY BE ASSESSED FOR COPIES OF PAST STATEMENTS. IN ADDITION, EACH PARTICIPANT WILL RECEIVE COPIES OF OTHER COMMUNICATIONS SENT TO HOLDERS OF SHARES OF COMMON STOCK (AND, IF APPLICABLE, PREFERRED STOCK) AND INTERNAL REVENUE SERVICE INFORMATION FOR REPORTING DIVIDEND INCOME RECEIVED. ALL NOTICES, STATEMENTS AND OTHER COMMUNICATIONS FROM THE PLAN ADMINISTRATOR TO PARTICIPANTS WILL BE ADDRESSED TO THE LATEST ADDRESS OF RECORD; THEREFORE, IT IS IMPORTANT THAT PARTICIPANTS PROMPTLY NOTIFY THE PLAN ADMINISTRATOR IN WRITING OF ANY CHANGE OF ADDRESS.

CERTIFICATES FOR SHARES

WILL CERTIFICATES BE ISSUED FOR SHARES OF COMMON STOCK PURCHASED UNDER THE PLAN?

NO. SHARES OF COMMON STOCK PURCHASED UNDER THE PLAN FOR THE ACCOUNTS OF PARTICIPANTS WILL BE REGISTERED IN THE NAME OF THE PLAN ADMINISTRATOR OR ITS NOMINEE. THE TOTAL NUMBER OF SHARES CREDITED TO AN ACCOUNT UNDER THE PLAN WILL BE SHOWN ON EACH STATEMENT OF ACCOUNT. THIS CUSTODIAL SERVICE PROTECTS PARTICIPANTS AGAINST THE RISK OF LOSS, THEFT OR DESTRUCTION OF STOCK CERTIFICATES.

A PARTICIPANT MAY OBTAIN A CERTIFICATE FOR ANY NUMBER OF WHOLE SHARES CREDITED TO HIS OR HER ACCOUNT UNDER THE PLAN AT ANY TIME BY WRITTEN REQUEST TO THE PLAN ADMINISTRATOR. IF CERTIFICATES FOR FEWER THAN ALL OF THE SHARES CREDITED TO A PARTICIPANT’S ACCOUNT ARE ISSUED, ANY REMAINING FULL SHARES AND FRACTIONAL SHARES WILL REMAIN CREDITED TO THE PARTICIPANT’S ACCOUNT.

CERTIFICATES FOR FRACTIONS OF SHARES WILL NOT BE ISSUED UNDER ANY CIRCUMSTANCES. (SEE QUESTION 26.)

IF A PARTICIPANT REQUESTS A CERTIFICATE, IN WHOSE NAME WILL THE CERTIFICATE BE REGISTERED WHEN ISSUED?

WHEN ISSUED AT THE REQUEST OF A PARTICIPANT, CERTIFICATES WILL BE REGISTERED ONLY IN THE NAME UNDER WHICH THE PARTICIPANT’S ACCOUNT UNDER THE PLAN IS MAINTAINED (ACCOUNTS WILL BE MAINTAINED IN THE NAMES IN WHICH CERTIFICATES OF THE PARTICIPANTS WERE REGISTERED AT THE TIME THE PARTICIPANTS ENTERED THE PLAN).

TRANSFER AND SALE

MAY SHARES HELD IN THE PLAN BE TRANSFERRED, ASSIGNED OR PLEDGED?

IF A PARTICIPANT WISHES TO CHANGE THE OWNERSHIP OF ALL OR PART OF THE SHARES CREDITED TO HIS OR HER ACCOUNT THROUGH GIFT, PRIVATE SALE OR OTHERWISE, THE PARTICIPANT MAY DO SO BY DELIVERING TO THE PLAN ADMINISTRATOR A WRITTEN REQUEST ACCOMPANIED BY A PROPERLY EXECUTED STOCK POWER WITH A MEDALLION GUARANTEE. (A MEDALLION GUARANTEE IS A UNIQUE SIGNATURE GUARANTEE FOR SECURITIES THAT MAY BE OBTAINED THROUGH FINANCIAL FIRMS, SUCH AS BANKS, CREDIT UNIONS, AND BROKERS, THAT PARTICIPATE IN THE MEDALLION SIGNATURE GUARANTEE PROGRAM.) STOCK POWER FORMS ARE AVAILABLE UPON REQUEST FROM THE PLAN ADMINISTRATOR. THE TRANSFER WILL BE EFFECTED AS SOON AS PRACTICABLE FOLLOWING THE PLAN ADMINISTRATOR’S RECEIPT OF THE REQUIRED DOCUMENTATION. NO FRACTIONAL SHARES OF COMMON STOCK CREDITED TO A PARTICIPANT’S ACCOUNT MAY BE TRANSFERRED. A TRANSFER REQUEST BY A PARTICIPANT FOR A FRACTIONAL SHARE SHALL BE DEEMED, AS TO THAT FRACTIONAL SHARE, A REQUEST TO SEND CASH. REQUESTS FOR ACCOUNT TRANSFERS ARE SUBJECT TO THE SAME REQUIREMENTS AS FOR THE TRANSFER OF SECURITIES, INCLUDING THE REQUIREMENT OF RECEIPT BY THE PLAN ADMINISTRATOR OF A PROPERLY EXECUTED STOCK POWER WITH A MEDALLION GUARANTEE.

UNLESS THE TRANSFEROR SPECIFICALLY REQUESTS A CERTIFICATE BE ISSUED, SHARES TRANSFERRED WILL BE CREDITED IN BOOK-ENTRY FORM TO THE TRANSFEREE’S ACCOUNT. AN ACCOUNT WILL BE OPENED IN THE NAME OF THE TRANSFEREE IF THE TRANSFEREE IS NOT ALREADY A PARTICIPANT, AND THE TRANSFEREE WILL AUTOMATICALLY BE ENROLLED IN THE PLAN. A TRANSFEREE WILL BE SENT A STATEMENT SHOWING THE TRANSFER OF THE SHARES INTO THE TRANSFEREE’S ACCOUNT.

A PARTICIPANT’S RIGHTS UNDER THE PLAN AND SHARES CREDITED TO THE ACCOUNT OF A PARTICIPANT UNDER THE PLAN MAY NOT BE PLEDGED. A PARTICIPANT WHO WISHES TO PLEDGE HIS OR HER SHARES MUST WITHDRAW FROM THE PLAN AND REQUEST THAT CERTIFICATES FOR SUCH SHARES BE ISSUED IN HIS OR HER NAME.

WHAT HAPPENS WHEN A PARTICIPANT SELLS OR TRANSFERS ALL OF THE SHARES REGISTERED IN HIS OR HER NAME?

IF A PARTICIPANT DISPOSES OF COMMON STOCK AND PREFERRED STOCK REGISTERED IN HIS OR HER NAME (THOSE SHARES WHICH ARE NOT REGISTERED IN THE NAME OF THE PLAN ADMINISTRATOR’S NOMINEE), THE DIVIDENDS ON THE SHARES PREVIOUSLY CREDITED TO HIS OR HER ACCOUNT UNDER THE PLAN MAY CONTINUE TO BE REINVESTED UNTIL THE PARTICIPANT NOTIFIES THE PLAN ADMINISTRATOR THAT HE OR SHE WISHES TO WITHDRAW FROM THE PLAN (SEE QUESTION 24), OR THE PLAN ADMINISTRATOR MAY, AT ITS OPTION, TERMINATE THE ACCOUNT. ADDITIONALLY, THE PARTICIPANT MAY MAKE VOLUNTARY CASH PAYMENTS TO THE PLAN. (SEE QUESTION 11.)

HOW MAY PARTICIPANTS SELL THEIR SHARES OF COMMON STOCK THROUGH THE PLAN?

AT ANY TIME, A PARTICIPANT MAY REQUEST THAT THE AGENT SELL SOME OR ALL OF THE SHARES OF COMMON STOCK CREDITED TO THE PARTICIPANT’S ACCOUNT BY SENDING TO THE PLAN ADMINISTRATOR DETAILED WRITTEN INSTRUCTIONS FOR THE AGENT’S SALE OF SUCH SHARES. IF SUCH INSTRUCTIONS ARE PROPERLY MADE, THE PLAN ADMINISTRATOR WILL PROVIDE THE INSTRUCTIONS TO THE AGENT AND THE AGENT WILL SELL THE REQUESTED SHARES IN ACCORDANCE WITH THE INSTRUCTIONS; THE MINIMUM SALE IS ONE SHARE. PARTICIPANTS MAY CONTACT THE PLAN ADMINISTRATOR FOR ASSISTANCE IN PROVIDING THE AGENT WITH PROPER INSTRUCTIONS. THE AGENT USUALLY WILL SELL THE REQUESTED SHARES WITHIN THE THREE BUSINESS DAYS AFTER RECEIPT OF THE INSTRUCTIONS, UNLESS SUCH RECEIPT OCCURS DURING THE TWO-DAY PERIOD PRIOR TO THE DIVIDEND RECORD DATE (THE “EX-DIVIDEND PERIOD”) IN WHICH CASE THE SALE WILL OCCUR AS SOON AS PRACTICABLE AFTER THE EX-DIVIDEND PERIOD. THE AGENT MAY SELL SUCH SHARES ON ANY SECURITIES EXCHANGE ON WHICH THE COMMON STOCK IS TRADED, IN THE OVER-THE-COUNTER MARKET OR BY NEGOTIATED TRANSACTIONS, AND SUCH SALES MAY BE SUBJECT TO SUCH TERMS OF PRICE, DELIVERY, ETC., AS THE AGENT MAY AGREE. THE PARTICIPANT WILL RECEIVE PROCEEDS OF SALES OF HIS OR HER SHARES OF COMMON STOCK BASED UPON THE AVERAGE PRICE OF ALL SHARES BELONGING TO THE PARTICIPANT SOLD ON THE PARTICULAR SALE DATE, LESS ANY BROKERAGE CHARGES, ADMINISTRATIVE FEES, TRANSFER TAXES, AND OTHER COSTS OF SALE, AND ANY REQUIRED FEDERAL TAX WITHHOLDING, IF APPLICABLE. PROCEEDS OF THE SALES WILL BE PAID BY CHECK. A REQUEST BY A PARTICIPANT WHO IS NOT AN EMPLOYEE USING THE PAYROLL DEDUCTION FEATURE TO SELL ALL SHARES HELD IN HIS OR HER ACCOUNT WILL BE TREATED AS A REQUEST FROM THE PARTICIPANT TO CLOSE HIS OR HER ACCOUNT AND AS A REQUEST TO TERMINATE ANY AUTOMATIC DEDUCTION DIRECTION IN EFFECT AT NBT BANK, N.A.

WITHDRAWAL

HOW DOES A PARTICIPANT WITHDRAW FROM THE PLAN?

A PARTICIPANT MAY WITHDRAW FROM THE PLAN AT ANY TIME BY SENDING A WRITTEN WITHDRAWAL NOTICE TO THE PLAN ADMINISTRATOR. A REQUEST TO WITHDRAW FROM THE PLAN WILL ALSO BE TREATED AS A REQUEST TO CEASE ANY DIRECT DEBITS AUTHORIZED WITH RESPECT TO THE PARTICIPANT’S CHECKING OR SAVINGS ACCOUNT, BUT EMPLOYEES WHO ARE MAKING VOLUNTARY CONTRIBUTIONS BY AUTOMATIC PAYROLL DEDUCTION MUST CONTACT THEIR EMPLOYER TO STOP SUCH PAYROLL DEDUCTIONS. WHEN A PARTICIPANT WITHDRAWS FROM THE PLAN, OR UPON TERMINATION OF THE PLAN BY BANCORP, CERTIFICATES FOR WHOLE SHARES CREDITED TO THE PARTICIPANT’S ACCOUNT UNDER THE PLAN WILL BE ISSUED TO THE PARTICIPANT AND A CASH PAYMENT WILL BE MADE FOR ANY FRACTION OF A SHARE. (SEE QUESTION 26.)

UPON A PARTICIPANT’S WITHDRAWAL FROM THE PLAN, THE PARTICIPANT MAY ALSO REQUEST THAT ALL OR PART OF THE WHOLE SHARES CREDITED TO HIS OR HER ACCOUNT IN THE PLAN BE SOLD. IF A PARTICIPANT MAKES SUCH A REQUEST, THE SALE WILL BE MADE IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE RESPONSE TO QUESTION 23.

IF THE PLAN ADMINISTRATOR RECEIVES ACTUAL WRITTEN NOTICE THAT A PARTICIPANT HAS DIED, THE PLAN ADMINISTRATOR WILL (IF THE DECEDENT IS THE SOLE OWNER OF THE SHARES HELD IN THE PARTICIPANT’S ACCOUNT) TREAT SUCH NOTICE AS A NOTICE OF WITHDRAWAL.

WHEN MAY A PARTICIPANT WITHDRAW FROM THE PLAN?

A PARTICIPANT MAY WITHDRAW FROM THE PLAN AT ANY TIME. IF THE WRITTEN NOTICE OF WITHDRAWAL IS RECEIVED BY THE PLAN ADMINISTRATOR AT LEAST FIFTEEN DAYS PRIOR TO THE TRANSFER DATE, THE NOTICE WILL BE EFFECTIVE AS TO THE NEXT TRANSFER DATE. ACCORDINGLY, THERE WOULD BE NO FURTHER REINVESTMENT OF DIVIDENDS AND ANY VOLUNTARY CASH PAYMENTS HELD IN THE PARTICIPANT’S ACCOUNT WILL BE RETURNED TO THE PARTICIPANT. THE PLAN ADMINISTRATOR MAY, IN ITS SOLE DISCRETION, PROCESS A NOTICE OF WITHDRAWAL RECEIVED LESS THAN SEVEN BUSINESS DAYS PRIOR TO THE TRANSFER DATE, BUT, IF THE NOTICE IS NOT PROCESSED BY THE PLAN ADMINISTRATOR, IT WILL NOT BE EFFECTIVE UNTIL AFTER THE APPLICABLE DIVIDEND AND ANY VOLUNTARY CASH PAYMENTS HELD IN THE PARTICIPANT’S ACCOUNT HAVE BEEN REINVESTED. ALL DIVIDENDS WITH A RECORD DATE AFTER THE TIMELY RECEIPT OF A WITHDRAWAL NOTICE WILL BE MAILED TO THE FORMER PARTICIPANT.

WHAT HAPPENS TO A FRACTION OF A SHARE WHEN A PARTICIPANT WITHDRAWS FROM THE PLAN?

WHEN A PARTICIPANT WITHDRAWS FROM THE PLAN, A CASH ADJUSTMENT REPRESENTING ANY FRACTION OF A SHARE THEN CREDITED TO THE PARTICIPANT’S ACCOUNT WILL BE MAILED DIRECTLY TO THE PARTICIPANT. THE CASH PAYMENT WILL BE BASED ON THE AVERAGE OF THE HIGHEST AND LOWEST QUOTED SELLING PRICES OF THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET ON THE TRADING DAY PRIOR TO THE EFFECTIVE DATE OF TERMINATION.

CAN A STOCKHOLDER RE-ENTER THE PLAN AFTER WITHDRAWING FROM THE PLAN?

YES. A STOCKHOLDER MAY RE-ENTER THE PLAN BY FOLLOWING THE PROCEDURES APPLICABLE FOR INITIAL ENROLLMENT IN THE PLAN. HOWEVER, BANCORP RESERVES THE RIGHT TO REJECT ANY AUTHORIZATION CARD FROM A PREVIOUS PARTICIPANT IN THE EVENT OF EXCESSIVE ENROLLMENTS AND WITHDRAWALS.

TAXES

WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN?

THE FOLLOWING SUMMARY ADDRESSES CERTAIN OF THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN. THE SUMMARY DOES NOT ADDRESS STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OR THE APPLICABILITY OF TAXES OTHER THAN FEDERAL INCOME TAXES. FURTHER, THE DISCUSSION RELATES ONLY TO HOLDERS OF COMMON STOCK. EACH PARTICIPANT SHOULD CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE PARTICULAR TAX CONSEQUENCES, INCLUDING STATE, LOCAL AND FOREIGN TAX CONSEQUENCES, WHICH MAY RESULT FROM PARTICIPATION IN THE PLAN AND A SUBSEQUENT DISPOSAL OF SHARES ACQUIRED PURSUANT TO THE PLAN.

WHERE THE SHARES ARE PURCHASED BY THE AGENT ON THE OPEN MARKET, THE PARTICIPANTS IN THE PLAN WILL BE TREATED FOR FEDERAL INCOME TAX PURPOSES AS HAVING RECEIVED A DIVIDEND EQUAL TO THE AMOUNT OF CASH USED TO PURCHASE SHARES ON THAT PARTICIPANT’S BEHALF. THE TAX BASIS OF SHARES SO PURCHASED WILL EQUAL THE PURCHASE PRICE OF THE SHARES PURCHASED ON THE OPEN MARKET.

A PARTICIPANT WILL NOT REALIZE ANY TAXABLE INCOME WHEN THE PARTICIPANT RECEIVES CERTIFICATES FOR WHOLE SHARES CREDITED TO HIS OR HER ACCOUNT UPON A REQUEST FOR SUCH CERTIFICATES OR UPON WITHDRAWAL FROM OR TERMINATION OF THE PLAN. HOWEVER, IF THE PARTICIPANT RECEIVES, UPON REQUEST, A CASH PAYMENT FOR THE SALE OF WHOLE OR FRACTIONAL SHARES CREDITED TO THE PARTICIPANT’S ACCOUNT, HE OR SHE WILL REALIZE GAIN OR LOSS MEASURED BY THE DIFFERENCE BETWEEN THE AMOUNT OF THE CASH RECEIVED AND HIS OR HER BASIS IN SUCH SHARES OR FRACTIONAL SHARES. SUCH GAIN OR LOSS WILL BE CAPITAL IN CHARACTER IF SUCH SHARES OR FRACTIONAL SHARES ARE A CAPITAL ASSET IN THE PARTICIPANT’S HANDS AND WILL BE LONG TERM CAPITAL GAIN IF SUCH SHARES WERE HELD FOR MORE THAN 12 MONTHS.

AN ANNUAL STATEMENT SUMMARIZING APPROPRIATE TAX INFORMATION WILL BE SENT TO YOU BY THE PLAN ADMINISTRATOR. IN ADDITION, THE FEDERAL TAX LAWS IMPOSE CERTAIN REPORTING OBLIGATIONS UPON BROKERS AND OTHERS. AS A RESULT, THE PLAN ADMINISTRATOR WILL BE REQUIRED TO REPORT ANY SALES OF STOCK BY IT ON BEHALF OF A PARTICIPANT IN THE PLAN.

THE TAX INFORMATION IN THIS ANSWER TO QUESTION 28 IS PROVIDED SOLELY AS A GUIDE AND MAY BE SUBJECT TO CHANGE BY FUTURE LEGISLATION. PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO STATE, LOCAL AND FEDERAL TAX ISSUES AND THE TAX CONSEQUENCES OF PARTICIPATING IN THE PLAN.

WHAT PROVISION IS MADE FOR STOCKHOLDERS SUBJECT TO FEDERAL INCOME TAX WITHHOLDING?

IN THE CASE OF A STOCKHOLDER WHOSE DIVIDENDS ARE SUBJECT TO FEDERAL INCOME TAX WITHHOLDING, THE AMOUNT OF TAX REQUIRED TO BE WITHHELD WILL BE DEDUCTED FROM THE AMOUNT OF CASH DIVIDENDS TO DETERMINE THE AMOUNT OF DIVIDENDS TO BE REINVESTED.

OTHER INFORMATION

WHAT HAPPENS IF BANCORP ISSUES A STOCK DIVIDEND OR DECLARES A STOCK SPLIT?

ANY STOCK DIVIDENDS OR SPLIT SHARES DISTRIBUTED BY BANCORP ON SHARES CREDITED TO THE ACCOUNT OF A PARTICIPANT UNDER THE PLAN WILL BE ADDED TO THE PARTICIPANT’S ACCOUNT. UPON WRITTEN REQUEST BY THE PARTICIPANT TO THE PLAN ADMINISTRATOR, CERTIFICATES FOR ANY NUMBER OF WHOLE SHARES SO CREDITED WILL BE ISSUED.

WHAT HAPPENS IF BANCORP OFFERS ITS STOCKHOLDERS RIGHTS TO PURCHASE ADDITIONAL SHARES OF COMMON STOCK OR ANY OTHER SECURITIES?

IF BANCORP MAKES AVAILABLE TO ITS STOCKHOLDERS RIGHTS TO PURCHASE ADDITIONAL SHARES OF COMMON STOCK OR ANY OTHER SECURITIES, THE AGENT WILL SELL SUCH RIGHTS ACCRUING TO SHARES HELD BY THE PLAN ADMINISTRATOR FOR THE PARTICIPANT AND THE RESULTING PROCEEDS WILL BE USED TO PURCHASE ADDITIONAL SHARES OF COMMON STOCK AS SOON AS PRACTICABLE AND WILL BE CREDITED TO THE PARTICIPANTS’ ACCOUNTS PRO RATA. PARTICIPANTS WHO WISH TO HAVE THE OPPORTUNITY TO EXERCISE ANY RIGHTS THAT MAY BE OFFERED BY BANCORP WITH RESPECT TO ITS COMMON STOCK OR PREFERRED STOCK SHOULD NOT LEAVE THEIR CERTIFICATES WITH THE PLAN ADMINISTRATOR, BUT INSTEAD SHOULD REQUEST THAT CERTIFICATES BE ISSUED. (SEE QUESTION 19.)

HOW WILL A PARTICIPANT’S SHARES HELD IN THE PLAN BE VOTED AT MEETINGS OF STOCKHOLDERS?

SHARES HELD BY THE PLAN ADMINISTRATOR FOR A PARTICIPANT WILL BE VOTED AS THE PARTICIPANT DIRECTS WITH RESPECT TO SHARES HELD IN HIS OR HER OWN NAME.

FOR EACH MEETING OF STOCKHOLDERS, THE PARTICIPANT WILL RECEIVE PROXY MATERIALS WHICH WILL ENABLE THE PARTICIPANT TO VOTE SHARES REGISTERED IN HIS OR HER OWN NAME AS WELL AS SHARES HELD BY THE PLAN ADMINISTRATOR FOR THE PARTICIPANT. IF THE PROXY CARD IS RETURNED BY THE PARTICIPANT PROPERLY SIGNED AND MARKED FOR VOTING, ALL WHOLE SHARES (BUT NOT FRACTIONAL SHARES) HELD FOR THE PARTICIPANT UNDER THE PLAN WILL BE VOTED IN THE SAME MANNER AS THE SHARES OWNED DIRECTLY BY THE PARTICIPANT. THE TOTAL NUMBER OF WHOLE SHARES HELD UNDER THE PLAN MAY ALSO BE VOTED BY THE PARTICIPANT IN PERSON AT A MEETING.

IF NO INSTRUCTIONS ARE RECEIVED ON A PROPERLY SIGNED RETURNED PROXY CARD WITH RESPECT TO ANY ITEM THEREON, ALL OF THE PARTICIPANTS’ SHARES WILL BE VOTED IN ACCORDANCE WITH THE MAJORITY VOTE OF BANCORP’S BOARD OF DIRECTORS AS SET FORTH ON THE PROXY CARD. IF THE PROXY CARD IS RETURNED UNSIGNED, OR IF THE PROXY CARD IS NOT RETURNED, THEN NONE OF THE PARTICIPANT’S SHARES WILL BE VOTED UNLESS THE PARTICIPANT VOTES IN PERSON.

WHAT IS THE RESPONSIBILITY OF BANCORP AND THE PLAN ADMINISTRATOR?

IN ADMINISTERING THE PLAN, BANCORP AND THE PLAN ADMINISTRATOR WILL NOT BE LIABLE FOR ANY ACT DONE IN GOOD FAITH OR FOR ANY GOOD FAITH OMISSIONS TO ACT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM OF LIABILITY (I) ARISING OUT OF FAILURE TO TERMINATE A PARTICIPANT’S ACCOUNT UPON SUCH PARTICIPANT’S DEATH PRIOR TO RECEIPT BY THE PLAN ADMINISTRATOR OF WRITTEN NOTICE OF SUCH DEATH, (II) WITH RESPECT TO PRICES AT WHICH SHARES ARE PURCHASED OR SOLD FOR THE PARTICIPANT’S ACCOUNT AND THE TIMES SUCH PURCHASES OR SALES ARE MADE, OR (III) WITH RESPECT TO ANY LOSS OR FLUCTUATION IN THE MARKET VALUE AFTER THE PURCHASE OR SALE OF SUCH SHARES. THIS PROVISION SHALL NOT APPLY TO THE VIOLATION OF ANY FEDERAL SECURITIES LAW.

PARTICIPANTS SHOULD RECOGNIZE THAT NEITHER BANCORP NOR THE PLAN ADMINISTRATOR CAN ASSURE PARTICIPANTS OF A PROFIT OR PROTECT THEM AGAINST A LOSS ON THE SHARES OF COMMON STOCK PURCHASED BY THEM UNDER THE PLAN.

MAY THE PLAN BE CHANGED OR DISCONTINUED?

YES. NOTWITHSTANDING ANY OTHER PROVISION OF THE PLAN, BANCORP (THROUGH ITS BOARD OF DIRECTORS) RESERVES THE RIGHT TO SUSPEND, MODIFY OR TERMINATE THE PLAN, OR THE PARTICIPATION IN THE PLAN BY ANY PARTICIPANT, AT ANY TIME. ALL PARTICIPANTS AFFECTED BY SUCH ACTION WILL RECEIVE NOTICE OF ANY SUCH SUSPENSION, MODIFICATION OR TERMINATION. ANY SUCH SUSPENSION, MODIFICATION OR TERMINATION WILL NOT AFFECT PREVIOUSLY EXECUTED TRANSACTIONS. UPON A TERMINATION OF THE PLAN BY BANCORP, CERTIFICATES FOR WHOLE SHARES CREDITED TO PARTICIPANTS’ ACCOUNTS WILL BE ISSUED, AND CASH PAYMENTS WILL BE MADE FOR ANY FRACTIONS OF A SHARE CREDITED TO PARTICIPANTS’ ACCOUNTS. SUCH CASH PAYMENTS WILL BE EQUAL TO THE AVERAGE OF THE HIGHEST AND LOWEST QUOTED SELLING PRICES OF THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET ON THE TRADING DAY PRIOR TO THE EFFECTIVE DATE OF TERMINATION.

WHO INTERPRETS THE PLAN?

BANCORP WILL INTERPRET AND REGULATE THE PLAN; ALL SUCH INTERPRETATIONS AND REGULATIONS WILL BE CONCLUSIVE.

WHERE SHOULD CORRESPONDENCE REGARDING THE PLAN BE DIRECTED?

ALL CORRESPONDENCE REGARDING THE PLAN SHOULD BE ADDRESSED TO:

NBT BANK, NATIONAL ASSOCIATION

20 Mohawk Street

Canajoharie, New York 13317

Attention: Transfer Agent

e-mail: customerservice@

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