SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Oneida Financial Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
March 23, 2000
Dear Shareholder:
We cordially invite you to attend the Annual Meeting of Shareholders of Oneida
Financial Corp. (the "Company"). The Annual Meeting will be held at the Greater
Oneida Civic Center, 159 Main Street, Oneida, New York, at 4:00 p.m., Eastern
Time, on April 25, 2000.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the Annual Meeting we will also report on the
operations of the Company. Directors and officers of the Company, as well as a
representative of our independent auditors, will be present to respond to any
questions that shareholders may have.
The Annual Meeting is being held so that stockholders may consider the election
of directors, the ratification of the appointment of PricewaterhouseCoopers, LLP
as the Company's auditors for fiscal year 2000, and the approval of the
Company's 2000 Stock Option Plan and 2000 Recognition and Retention Plan.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
shareholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible, even if you currently plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting. Your
vote is important, regardless of the number of shares that you own.
Sincerely,
/s/Michael R. Kallet
- --------------------
Michael R. Kallet
President and Chief Executive Officer
<PAGE>
Oneida Financial Corp.
182 Main Street
Oneida, New York 13421
(315) 363-2000
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 25, 2000
Notice is hereby given that the Annual Meeting of Oneida Financial
Corp., (the "Company") will be held at the Greater Oneida Civic Center, 159 Main
Street, Oneida, New York, on April 25, 2000 at 4:00 p.m., Eastern Time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. Election of three Directors to the Board of Directors;
2. The approval of the Oneida Financial Corp. 2000 Stock Option
Plan;
3. The approval of the Oneida Financial Corp. 2000 Recognition
and Retention Plan;
4. The ratification of the appointment of PricewaterhouseCoopers,
LLP as auditors for the Company for the fiscal year ending
December 31, 2000; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which the Annual
Meeting may be adjourned. Shareholders of record at the close of business on
March 13, 2000, are the shareholders entitled to vote at the Annual Meeting, and
any adjournments thereof.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING,
IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
Eric E. Stickels
Secretary
March 23, 2000
<PAGE>
PROXY STATEMENT
Oneida Financial Corp.
182 Main Street
Oneida, New York 13421
(315) 363-2000
ANNUAL MEETING OF SHAREHOLDERS
April 25, 2000
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Oneida Financial Corp. (the
"Company") to be used at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting"), which will be held at the Greater Oneida Civic Center, 159
Main Street, Oneida, New York, on April 25, 2000, at 4:00 p.m., Eastern Time,
and all adjournments of the Annual Meeting. The accompanying Notice of Annual
Meeting of Shareholders and this Proxy Statement are first being mailed to
shareholders on or about March 23, 2000.
REVOCATION OF PROXIES
Shareholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, validly executed proxies will be voted "FOR" the
proposals set forth in this Proxy Statement for consideration at the Annual
Meeting.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, at the address shown above. The presence at the Annual
Meeting of any shareholder who had returned a proxy shall not revoke such proxy
unless the shareholder delivers his or her ballot in person at the Annual
Meeting or delivers a written revocation to the Secretary of the Company prior
to the voting of such proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of the Company's common stock, par value $0.10 per
share (the "Common Stock") as of the close of business on March 13, 2000 (the
"Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Company had 3,266,251 shares of Common Stock issued and
outstanding, 1,915,445 of which were held by Oneida Financial, MHC (the "Mutual
Holding Company"), and 1,350,806 of which were held by shareholders other than
the Mutual Holding Company ("Minority Shareholders"). The presence in person or
by proxy of a majority of the outstanding shares of Common Stock entitled to
vote is necessary to constitute a quorum at the Annual Meeting. Directors are
elected by a plurality of votes cast, without regard to either broker non-votes,
or proxies as to which the authority to vote for the nominees being proposed is
withheld. The affirmative vote of holders of a majority of the total votes
present at the Annual Meeting in person or by proxy is required for ratification
of PricewaterhouseCoopers, LLP as the Company's auditors. Proposal II and
Proposal III shall be determined by a majority of the votes cast, without regard
to broker votes or proxies marked abstain.
<PAGE>
Persons and groups who beneficially own in excess of five percent of
the Common Stock are required to file certain reports with the Securities and
Exchange Commission (the "SEC") regarding such ownership. The following table
sets forth, as of the Record Date, the shares of Common Stock beneficially owned
by Directors individually, by executive officers individually, by executive
officers and Directors as a group and by each person who was the beneficial
owner of more than five percent of the Company's outstanding shares of Common
Stock.
Amount of Shares
owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owners ownnership (1) (4) Outstanding
----------------- ------------------ -----------
Directors and Officers (2):
Nicholas J. Christakos 27,000 0.83%
Michael R. Kallet 28,545 0.87
Patricia D. Caprio 10,000 0.31
Edward J. Clarke 5,538 0.17
James J. Devine, Jr. 7,900 0.24
John E. Haskell 23,892 0.73
Rodney D. Kent 25,000 0.76
William D. Matthews 5,000 0.15
Michael W. Milmoe 3,000 0.09
Richard B. Myers 17,000 0.52
Frank O. White, Jr. 10,000 0.31
Eric E. Stickels 17,808 0.55
Thomas H. Dixon 15,438 0.47
All Directors and Executive Officers 196,121 6.00
as a Group (13 persons) (3)
Principal Shareholders:
Oneida Financial, MHC (3) 1,915,445 58.65
182 Main Street
Oneida, New York 13421
Oneida Financial, MHC (3) 2,111,566 64.65%
and all Trustees and Executive Officers
of Oneida Financial, MHC as a group (12 persons)
- -----------------------------
<PAGE>
* Less than one-tenth of 1%.
(1) A person is deemed to be the beneficial owner for purposes of this table,
of any shares of Common Stock if he has shared voting or investment power
with respect to such security, or has a right to acquire beneficial
ownership at any time within 60 days from the Record Date. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. Includes all shares held directly as well as by spouses and minor
children, in trust and other indirect ownership, over which shares the
named individuals effectively exercise sole or shared voting and investment
power. Unless otherwise indicated, the named individual has sole voting and
investment power.
(2) The mailing address for each person is listed as 182 Main Street, Oneida,
New York 13421.
(3) The Company's executive officers and directors are also executive officers
and trustees of Oneida Financial, MHC, with the exception of John E.
Haskell.
2
<PAGE>
PROPOSAL I--ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of eleven (11)
members. The Company's Bylaws provide that approximately one-third of the
Directors are to be elected annually. Directors of the Company are generally
elected to serve for a three-year period or until their respective successors
shall have been elected and shall qualify. Three Directors will be elected at
the Annual Meeting to serve for a three-year period and until their respective
successors shall have been elected and shall qualify. The Board of Directors has
nominated to serve as Directors, Nicholas J. Christakos, Patricia D. Caprio and
Frank O. White, who are currently members of the Board of Directors.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors, including the terms of office
of Board members. It is intended that the proxies solicited on behalf of the
Board of Directors (other than proxies in which the vote is withheld as to one
or more nominees) will be voted at the Annual Meeting for the election of the
nominees identified below. If the nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why any of the nominees might be unable to serve,
if elected. Except as indicated herein, there are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Positions Director Current Term Owned on Percent
Name (1) Age* Held Since (2) to Expire Record Date (3) Of Class
-------- ---- ---- --------- --------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
Nicholas J. Christakos 68 Chairman of the Board 1974 2000 27,000 0.83
Patricia D. Caprio 50 Director 1985 2000 10,000 0.31
Frank O. White, Jr. 44 Director 1994 2000 10,000 0.31
DIRECTORS CONTINUING IN OFFICE
Michael R. Kallet 48 President and Chief 1997 2001 28,545 0.87
Executive Officer
James J. Devine, Jr. 65 Director 1987 2001 7,900 0.24
John E. Haskell 57 Director 1992 2001 23,892 0.73
William D. Matthews 64 Director 1996 2001 5,000 0.15
Edward J. Clarke 60 Director 1987 2002 5,538 0.17%
Rodney D. Kent 52 Director 1990 2002 25,000 0.76
Michael W. Milmoe 67 Director 1976 2002 3,000 0.09
Richard B. Myers 63 Director 1981 2002 17,000 0.52
</TABLE>
- -----------------
<PAGE>
(1) The mailing address for each person listed is 182 Main Street, Oneida, New
York 13421. Each of the persons listed, with the exception of John E.
Haskell, is also a Trustee of Oneida Financial, MHC, which owns the
majority of the Company's issued and outstanding shares of Common Stock.
(2) Reflects initial appointment to the Board of Trustees of the mutual
predecessor to The Oneida Savings Bank. (3) See definition of "beneficial
ownership" in the table in "Voting Securities and Principal Holders
Thereof." * At December 31, 1999.
The principal occupation during the past five years of each Director is
set forth below. All Directors have held their present positions for five years
unless otherwise stated.
3
<PAGE>
Nicholas J. Christakos is the Chairman of the Board. Mr. Christakos is
a retired businessman.
Michael R. Kallet is President and Chief Executive Officer of the Bank.
Mr. Kallet has been President and Chief Executive Officer since March 1990.
Patricia D. Caprio is the Director of Development Programs at Colgate
University.
Edward J. Clarke is the President of Kennedy & Clarke, Inc., a property
and casualty insurance agency located in Cazenovia, New York.
James J. Devine, Jr. is the former President of the Kiley Law Firm,
P.C. located in Oneida, New York.
John E. Haskell is the President of Bailey & Haskell Associates, Inc.,
an insurance agency located in Oneida, New York.
Rodney D. Kent is the President of Omega Wire, Inc., a copper wire
manufacturer located in Camden, New York.
William D. Matthews is the Chairman and Retired Chief Executive Officer
of Oneida, Ltd. located in Oneida, New York. Mr. Matthews is also a director of
Conmed Corporation located in Utica, New York.
Michael W. Milmoe is retired. Prior to his retirement, Mr. Milmoe was
the President of Canastota Publishing Co., Inc., located in Canastota, New York.
Richard B. Myers is the President of Orthodontic Associates of C.N.Y.,
P.C. a clinical orthodontic practice located in Oneida, New York and Norwich,
New York.
Frank O. White, Jr. is the Assistant Director of Athletics at Colgate
University. Until January 1998, Mr. White was the President and Chief Executive
Officer of Mid-State Raceway, Inc. located in Vernon, New York.
Ownership Reports by Officers and Directors
The Common Stock of the Company is registered with the SEC pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"). The
officers and directors of the Company and beneficial owners of greater than 10%
of the Company's Common Stock ("10% beneficial owners") are required to file
reports on Forms 3,4 and 5 with the SEC disclosing beneficial ownership and
changes in beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company's Proxy Statement or Annual Report on Form 10-K of the
failure of an officer, director or 10% beneficial owner of the Company's Common
Stock to file a Form 3, 4, or 5 on a timely basis. All of the Company's officers
and directors filed these reports on a timely basis.
Meetings and Committees of the Board of Directors
During the year ended December 31, 1999, the Board of Directors held
12 regular and special meetings. During the year ended December 31, 1999, no
Director attended fewer than 75% percent of the total meetings of the Board of
Directors of the Company and committees on which such Director served.
<PAGE>
The executive committee consists of the following six directors of the
Company: Messrs. Myers, Christakos, Kent, Clarke, Haskell and Milmoe. The
executive committee meets as necessary when the board is not in session to
exercise general control and supervision in all matters pertaining to the
interests of the Company, subject at all times
4
<PAGE>
to the direction of the board of directors. The executive committee also serves
as the nominating committee for the purpose of identifying, evaluating and
recommending potential candidates for election to the board.
The audit committee consists of the following directors of the Company:
Messrs. Kent, Christakos, Myers, White and Milmoe. The audit committee meets at
least quarterly to examine and approve the audit report prepared by the
independent auditors of the Bank, to review and recommend the independent
auditors to be engaged by the Company, to review the internal audit function and
internal accounting controls of the Company, and to review and approve audit
policies.
Personnel Committee Interlocks and Insider Participation
The full Board of Directors of the Bank has in the past determined the
salaries to be paid each year to the Bank's officers. In the future the full
Board of Directors of the Company shall act as the Compensation Committee for
the Company. Michael R. Kallet is a Director of the Company and the Bank in
addition to being the President and Chief Executive Officer of the Company and
the Bank. Mr. Kallet has not, and will not, participate in the Board of
Directors' determination of compensation for the President and Chief Executive
Officer.
Report of the Board of Directors on Executive Compensation
Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to its Chief Executive Officer and other executive officers. The disclosure
requirements for the Chief Executive Officer and other executive officers
include the use of tables and a report explaining the rationale and
considerations that led to fundamental executive compensation decisions
affecting those individuals. In fulfillment of this requirement, the Company's
Board of Directors has prepared the following report for inclusion in this proxy
statement. The discussion below relates to the Bank's Board actions during 1999.
The Board of Directors annually reviews the performance of the Chief
Executive Officer and other executive officers and approves changes to base
compensation as well as the level of bonus, if any, to be awarded. In
determining whether the base salary of the Chief Executive Officer and other
executive officers should be increased, the Board of Directors takes into
account individual performance, performance of the Company, the size of the
Company and the complexity of its operations, and information regarding
compensation paid to executives performing similar duties for financial
institutions in the Bank's market area.
While the Board of Directors does not use strict numerical formulas to
determine changes in compensation for the Chief Executive Officer and other
executive officers; and while it weighs a variety of different factors in its
deliberations, it has emphasized and will continue to emphasize earnings,
profitability, capital position and asset quality, and return on tangible equity
as factors in setting the compensation of the Chief Executive Officer and other
executive officers. Other non-quantitative factors considered by the Board of
Directors in fiscal 1999 included general management oversight of the Company,
the quality of communication with the Board of Directors, and the productivity
<PAGE>
of employees. Finally, the Board of Directors considered the standing of the
Company with customers and the community, as evidenced by the level of
customer/community complaints and compliments. While each of the quantitative
and non-quantitative factors described above was considered by the Board of
Directors, such factors were not assigned a specific weight in evaluating the
performance of the Chief Executive Officer and other executive officers. Rather,
all factors were considered, and based upon the effectiveness of such officers
in addressing each of the factors, and the range of compensation paid to
officers of peer institutions, the Board of Directors approved an increase in
the base salary of the Chief Executive Officer and other executive officers.
Accordingly, the Board of Directors approved salary increases totaling $30,000
for the Company's and Bank's three executive officers, bringing total base
compensation for the group to $395,000 from $365,000 in 1999.
5
<PAGE>
This report has been provided by the Board of Directors: Nicholas J.
Christakos, Michael R. Kallet, Patricia D. Caprio, Edward J. Clarke, James J.
Devine, Jr., John E. Haskell, Rodney D. Kent, William D. Matthews, Michael W.
Milmoe, Richard B. Myers and Frank O. White, Jr.
Directors' Compensation
Directors of the Company are not separately compensated.
Directors of the Bank receive an annual retainer of $6,000 and a fee of
$300 for each Bank Board meeting attended. Directors receive $200 for each
committee meeting attended. Members of the Executive Committee receive $250 for
each Executive Committee meeting attended. The Chairman of the Board receives an
additional $200 for every Board meeting attended and each committee chair
receives an additional $100 for every committee meeting attended. Employee
directors do not receive monthly meeting fees. The Bank paid a total of $126,800
in Director fees during the year ending December 31, 1999.
Executive Compensation
The following table sets forth for the years ended December 31,1999,
1998 and 1997, certain information as to the total remuneration paid by the
Company to the Company's chief executive officer, and all other officers of the
Company which received cash compensation exceeding $100,000 in 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation(1) Compensation Awards
------------------------------- ----------------------------
Fiscal
Years Other Restricted
Ended Annual Stock Options/ All Other
Name and December Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position 31 ($) ($) ($)(1) ($)(2) (#)(3) ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael R. Kallet 1999 $175,000 $30,000 $-- -- -- -- $28,138
President and Chief 1998 $167,000 $27,000 $-- -- -- -- $20,557
Executive Officer 1997 $159,000 $30,000 $-- -- -- -- $17,953
Eric E. Stickels 1999 $95,000 $14,195 $-- -- -- -- $18,630
Sr. Vice President 1998 $86,385 $10,369 $-- -- -- -- $13,762
and Chief Financial 1997 $75,010 $11,252 $-- -- -- -- $11,510
Officer
Thomas H. Dixon 1999 $95,000 $14,140 $-- -- -- -- $18,449
Sr. Vice President - 1998 $84,885 $10,183 $-- -- -- -- $13,712
Credit Administration 1997 $74,923 $11,225 $-- -- -- -- $11,430
</TABLE>
- -------------
<PAGE>
(1) The Bank also provides certain members of senior management, including Mr.
Kallet, with the use of an automobile, club membership dues, and certain
other personal benefits which have not been included in the table. The
aggregate amount of such other benefits did not exceed the lesser of
$50,000 or 10% of Mr. Kallet's cash compensation for the year. At December
31, 1999, neither the Company nor the Bank had implemented a Stock Award
Plan. At December 31, 1999, neither the Company nor the Bank had
implemented a Stock Option Plan.
(2) At December 31, 1999, neither of the Company nor the Bank had implemented a
Stock Award Plan.
(3) At December 31, 1999, neither the Company nor the Bank had implemented a
Stock Option Plan.
6
<PAGE>
Stock Performance Graph
Set forth hereunder is a stock performance graph comparing (a) the
cumulative total return on the Common Stock for the period beginning with the
last trade of the Company's stock on December 30, 1998, as reported by the
Nasdaq Market, through December 31, 1999, (b) the cumulative total return on
stocks included in the S&P 500 Index over such period, and (c) the cumulative
total return of publicly traded thrifts or thrift holding companies in the
mutual holding company structure over such period. Cumulative return assumes the
reinvestment of dividends, and is expressed in dollars based on an assumed
investment of $100.
Assuming an initial investment in the Common Stock of Oneida Financial
Corp. of $100.00 at the initial public offering price of $10.00 per share on
December 30, 1998, the cumulative total value with dividends reinvested would be
$113.38 at December 31, 1999.
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
<TABLE>
<CAPTION>
Cumulative Return on Common Stock
12/30/98 12/31/98 03/31/99 06/30/99 09/30/99 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Oneida Financial $ 100.00 100.00 81.82 90.91 95.65 102.56
Corp.
S&P 500 $ 100.00 99.78 104.75 112.13 105.13 120.78
MHC Thrifts $100.00 102.14 101.58 103.89 97.08 90.85
</TABLE>
7
<PAGE>
Benefit Plans
Incentive Compensation Plan. The Incentive Compensation Plan (the
"Incentive Plan") was established in 1993 as a non-qualified plan. Under the
Incentive Plan, annual performance awards for the Bank's financial performance
relative to the return on average assets as reported by the FDIC, adjusted for
any one-time income or expense recognition, are made to eligible non-trustee
officers and employees designated as participants by the Human Resource and
Development Committee.
Participants are classified into four categories: Class I (CEO and
EVP), Class II (Senior Management Group), Class III (All Other Officers) and
Class IV (Supervisors and all other employees). Awards are allocated to eligible
participants within each class in accordance with the participant's base
compensation (as reported to the Internal Revenue Service on Form W-2) as a
ratio of the base compensation of the entire class. The maximum award payable to
each participant in Class I is 25%, Class II and Class III is 40% and Class IV
is 35% and the maximum total award payable to all participants is 10% of the
Bank's income. The following limitations on awards also apply: If the return on
average assets for an award year is (i) less than .75%, no award will be made to
any Class I, Class II or Class III participant, (ii) less than .75% but at least
.60%, Class IV participants will receive awards equivalent to 5% of base
compensation and (iii) less than .60%, no award shall be made to any
participant. No award shall be made to any participant if (i) average total
assets do not exceed $200 million for the award year, (ii) the most recent
Regulatory Examination Report does not reflect a Uniform Composite Rating of 1
or 2, or (iii) the allowance for possible loan losses at the end of the award
year is less than the greater of 1% of outstanding loans or the regulatory
guideline amount.
Defined Benefit Pension Plan. The Bank maintains the Retirement Plan of
The Oneida Savings Bank in RSI Retirement Trust ("Retirement Plan") which is a
qualified, tax-exempt defined benefit plan. Employees age 21 or older who have
worked at the Bank for a period of one year and have been credited with 1,000 or
more hours of service with the Bank during the year are eligible to participate
in the Retirement Plan, provided, however, that leased employees, employees paid
on an hourly rate or contract basis and employees regularly employed outside the
Bank's offices in connection with the operation and maintenance of buildings or
other properties acquired through foreclosure or deed are not eligible to
participate. The Bank contributes each year, if necessary, an amount to the
Retirement Plan to satisfy the actuarially determined minimum funding
requirements in accordance with the ERISA. At January 1, 2000, the total market
value of the assets in the Retirement Plan trust fund was approximately $4.7
million.
In the event of retirement on or after the normal retirement date
(i.e., the first day of the calendar month coincident with or next following the
later of age 65 or the 5th anniversary of participation in the Retirement Plan
or, for a participant prior to October 1, 1988, age 65) the plan is designed to
provide a single life annuity. For a married participant, the normal form of
benefit is an actuarially reduced joint and survivor annuity where, upon the
participant's death, the participant's spouse is entitled to receive a benefit
equal to 50% of that paid during the participant's lifetime. Alternatively, a
participant may elect (with proper spousal consent, if necessary) from various
other options, including a joint and 100% survivor annuity, period certain and
life option, rollover or direct transfer to an individual retirement account.
The normal retirement benefit provided is an amount equal to 2% of a
participant's average annual earnings, multiplied times the years of a
participant's credited service, not to exceed 70% of a participant's average
<PAGE>
annual earnings during the consecutive 36 month period yielding the highest
average in the participant's final 10 years of employment. Retirement benefits
are also payable upon retirement due to early and late retirement or death. A
reduced benefit is payable upon early retirement after completion of five years
of service, at age 60 or once the sum of the participant's age and years of
vested service equals 75. In the event of a participant's pre-retirement death
on or after attainment of age 60 or after the sum of the participant's age and
service (including service with certain other employers participating in the RSI
Retirement Trust) equals or exceeds 75, a participant's beneficiary will be
entitled to a special pre-retirement survivor benefit. The special
pre-retirement survivor benefit will be equal to that which would have been
available to the beneficiary if the participant had retired and elected a 100%
joint and survivor benefit. In the event of the death of a participant prior to
satisfaction of the conditions for a special pre-retirement survivors benefit,
but after having met the requirements for a vested retirement benefit, the
vested retirement benefit will be equal to that which would have been available
to the beneficiary if the participant had retired and elected a 50% joint and
survivor benefit. Upon termination of employment other than as specified
8
<PAGE>
above, a participant who has five years of vested service is eligible to receive
his or her accrued benefit commencing, generally, on his normal retirement date,
or, if elected, on or after his early retirement date. In certain cases, a
participant who had three years of service on or before November 1, 1993, but
not more than four years of service, will be entitled to up to 40% of his vested
accrued benefit at his normal or early retirement date.
The following table indicates the annual retirement benefit that would
be payable under the Retirement Plan upon retirement at age 65 in calendar year
1998, expressed in the form of a single life annuity for the final average
salary and benefit service classifications specified below.
<TABLE>
<CAPTION>
Average Annual Years of Service and Benefit Payable at Retirement
-------------------------------------------------------------
Earnings 15 20 25 30 35
-------- ----------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
$ 50,000 15,000 20,000 25,000 30,000 35,000
$ 75,000 22,500 30,000 37,500 45,000 52,500
$100,000 30,000 40,000 50,000 60,000 70,000
$125,000 37,500 50,000 62,500 75,000 87,500
$160,000 and above 48,000 64,000 80,000 96,000 112,000
</TABLE>
The maximum annual compensation which may be taken into account under
the Code for calculating contributions under qualified defined benefit plans
such as the Retirement Plan is currently $160,000. As of December 31, 1999, Mr.
Kallet had 16.9 years of credited service (i.e., benefit service) under the
Retirement Plan.
Effective October 1, 1999, the plan was restated and replaced with The
Retirement Accumulation Plan of The Oneida Savings Bank in RSI Retirement Trust
("Cash Balance Plan"). Under the restated plan, all active participants in the
Retirement Plan converted their respective accrued benefit as of September 30,
1999 for an equivalent single sum in the Cash Balance Plan. For each plan year
beginning October 1, 1999 for which a participant earns an additional year of
credited employment service, their respective retirement account shall be
credited with the sum of (i) and (ii):
(i) interest equal to the annual yield on 30 year
Constant Treasury Maturities as determined at the
beginning of the Plan Year,
(ii) a percentage of Compensation for any participant who
is still an employee of the Bank based on their years
of Vested Service according to the following
schedule:
Less than 5 years 4%
Between 5 and 10 years 5%
Between 10 and 15 years 6%
Greater than 15 years 7%
<PAGE>
Effective October 1, 1999, participants with 5 or more years of vested
service at the time of termination of service can receive their full Accumulated
Retirement Account as a single distribution or as an equivalent annuity. All
other plan provisions and vesting schedules are substantially similar to the
predecessor Plan.
401(k) Plan. The Bank maintains the Oneida Savings Bank 401(k) Savings
Plan in RSI Retirement Trust (the "401(k) Plan") which is a qualified,
tax-exempt profit sharing plan with a salary deferral feature under Section
401(k) of the Code. Employees who have completed one year of employment are
eligible to participate, provided, however, that leased employees, employees
paid on a daily fee or retainer basis and employees covered by a collective
bargaining agreement (unless the agreement provides for plan participation) are
not eligible to participate. Eligible employees are entitled to enter the 401(k)
Plan on the first day of any payroll period following the completion of the
eligibility requirements.
Under the 401(k) Plan, participants are permitted to make salary
reduction contributions (in whole percentages) equal to the lesser of (i) from
1% to 10% of compensation or (ii) $10,000 (as indexed annually). For these
purposes, "compensation" includes wages, salary, fees and other amounts received
for personal services prior to reduction for the participant contribution to the
401(k) Plan, commissions, overtime, bonuses, wage continuation payments due to
illness or disability of a short-term nature, amounts paid or reimbursed for
moving expenses, and
9
<PAGE>
the value of any nonqualified stock option granted to the extent includable in
gross income for the year granted. Compensation does not include contributions
made by the Bank to any other pension, deferred compensation, welfare or other
employee benefit plan, amounts realized from the exercise of a nonqualified
stock option or the sale of a qualified stock option, and other amounts which
received special tax benefits. Compensation does not include compensation in
excess of the Code Section 401(a)(17) limits (i.e., $160,000 in 1999). The Bank
will match 100% of the first 3% of salary that a participant contributes to the
401(k) Plan. All salary reduction contributions and rollover contributions and
earnings thereon are fully and immediately vested. Matching contributions and
earnings thereon vest at 20% per year, until a participant is 100% vested after
five years of service. A participant may withdraw salary reduction
contributions, rollover contributions and vested matching contributions in the
event the participant suffers a financial hardship. A participant may make a
withdrawal from his salary reduction contributions, rollover contributions and
vested matching contribution for any reason after age 59 1/2. A participant may
request a loan from his or her accounts in an amount up to the lesser of (i) 50%
of the net value of the Basic Contribution Account, vested Matching Contribution
Account, Voluntary Contribution Account and Rollover Contribution Account, or
(ii) $50,000 reduced by the highest outstanding loan balance during the
preceding twelve months. The minimum loan permitted is $1,000.
The 401(k) Plan permits employees to direct the investment of his or
her own accounts into various investment options. As a result of the Offering,
the 401(k) Plan provided participants the opportunity to invest in an "Employer
Stock Fund" which purchased Common Stock in the Offering. Each participant who
directs the trustee to invest all or part of his or her account in the Employer
Stock Fund will have assets in his or her account applied to the purchase of
shares of Common Stock. Participants will be entitled to direct the trustee as
to how to vote his or her allocable shares of Common Stock.
Plan benefits will be paid to each participant in the form of a single
cash payment at normal retirement age unless earlier or later payment is
selected. A participant may, however, elect payment in installments, direct
transfer to another qualified plan or rollover to an Individual Retirement
Account. If a participant dies prior to receipt of the entire value of his or
her 401(k) Plan accounts, payment will generally be made to the beneficiary in a
single cash payment as soon as possible following the participant's death.
Payment will be deferred if the participant had previously elected a later
payment date. If the beneficiary is not the participant's spouse, payment will
be made within one year of the date of death. If the spouse is the designated
beneficiary, payment will be made no later than the date the participant would
have attained age 70 1/2. If the participant was receiving installment payments
and dies before receiving all installments, the designated beneficiary will
continue to receive the installments in the same manner as the participant.
Normal retirement age under the 401(k) Plan is 65 with five years of service.
Early retirement age is age 60 with five years of service.
At December 31, 1999, the total market value of the assets in the
401(k) Plan was approximately $2.7 million. The Bank's matching contributions to
the 401(k) Plan for the Plan year ended December 31, 1999 totaled approximately
$74,000.
Employee Stock Ownership Plan and Trust. The Bank implemented an
Employee Stock Ownership Plan (the "ESOP") in connection with the
Reorganization. Employees with at least one year of employment with the Bank and
<PAGE>
who have attained age 21 are eligible to participate. As part of the
Reorganization, the ESOP borrowed funds from the Company and used those funds to
purchase a number of shares equal to up to 8.0% of the Minority Ownership
Interest. Collateral for the loan was the Common Stock purchased by the ESOP.
The loan will be repaid principally from the Bank's discretionary contributions
to the ESOP over a period of up to 10 years. The interest rate for the loan is
7.75%. Shares purchased by the ESOP are held in a suspense account for
allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account
in an amount proportional to the repayment of the ESOP loan are allocated among
ESOP participants on the basis of compensation in the year of allocation. For
this purpose, compensation is defined as wages reported on federal income tax
Form W-2 and also includes amounts contributed under a salary reduction
agreement pursuant to Section 401(k) or Section 125 of the Code, but not in
excess of the Code Section 401(a)(17) limit. Participants in the ESOP receive
credit for all years of service prior to the effective date of the ESOP for
vesting purposes. A participant vests in 100% of his or her
10
<PAGE>
account balance after five years of vesting service or upon normal or early
retirement (as defined in the ESOP), disability, death or following a change in
control. A participant who terminates employment for reasons other than death,
retirement, disability or following a change in control, prior to five years of
credited service forfeits the nonvested portion of his benefits under the ESOP.
Benefits are payable in the form of Common Stock and cash upon death,
retirement, disability or separation from service. Alternatively, a participant
may request that the benefits be paid entirely in the form of Common Stock or
entirely in cash. The Bank's contributions to the ESOP are discretionary,
subject to the loan terms and tax law limits, and therefore, benefits payable
under the ESOP cannot be estimated. In November 1993, the American Institute of
Certified Public Accountants (the "AICPA") issued Statement of Position ("SOP")
93-6, which requires the Bank to record compensation expense in an amount equal
to the fair market value of the shares committed to be released from the
suspense account each year.
In connection with the establishment of the ESOP, the Bank established
an employee committee to administer the ESOP. The Bank appointed an independent
retirement plan administrator to serve as trustee of the ESOP. The ESOP
committee may instruct the trustee regarding investment of funds contributed to
the ESOP. The ESOP trustee, subject to its fiduciary duty, must vote all
allocated shares held in the ESOP in accordance with the instructions of
participating employees. Under the ESOP, nondirected shares and shares held in
the suspense account, are voted in a manner calculated to most accurately
reflect the instructions it has received from participants regarding the
allocated stock so long as such vote is in accordance with the provisions of
ERISA.
Transactions With Certain Related Persons
All transactions between the Company and its executive officers,
directors, holders of 10% or more of the shares of its Common Stock and
affiliates thereof, are on terms no less favorable to the Company than could
have been obtained by it in arm's-length negotiations with unaffiliated persons.
Such transactions must be approved by a majority of independent outside
directors of the Company not having any interest in the transaction.
- --------------------------------------------------------------------------------
PROPOSAL II--APPROVAL OF THE
ONEIDA FINANCIAL CORP. 2000 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
General
Pursuant to the Oneida Financial Corp. 2000 Stock Option Plan (the
"Stock Option Plan") options to purchase up to 166,475 shares of Common Stock
(or 10% of the shares issued to persons other than the mutual holding company in
the Company's stock offering) may be granted to the Bank's and the Company's
employees and Directors. The Board of Directors believe that it is appropriate
to adopt a flexible and comprehensive stock option plan that permits the
granting of a variety of long-term incentive awards to directors and officers as
a means of enhancing and encouraging the recruitment and retention of those
individuals on whom the continued success of the Bank and the Company most
depends.
<PAGE>
Attached as Appendix A to this Proxy Statement is the complete text of
the form of the Stock Option Plan. The principal features of the Stock Option
Plan are summarized below.
Principal Features of the Stock Option Plan
The Stock Option Plan provides for awards in the form of stock options,
reload options, limited stock appreciation rights ("Limited Rights") and
dividend equivalent rights. Each award shall be on such terms and conditions,
consistent with the Stock Option Plan, as the committee administering the Stock
Option Plan may determine.
The term of stock options will not exceed ten years from the date of
grant. Stock options granted under the Stock Option Plan may be either
"Incentive Stock Options" as defined under Section 422 of the Code, or stock
options not intended to qualify as such ("non-qualified stock options").
11
<PAGE>
Shares issued upon the exercise of a stock option may be either
authorized but unissued shares or reacquired shares held by the Company in its
treasury. Any shares subject to an award that expires or is terminated
unexercised will again be available for issuance under the Stock Option Plan.
Generally, in the discretion of the Board, all or any non-qualified stock
options granted under the Stock Option Plan may be transferable by the
participant but only to the persons or classes of persons determined by the
Board. No other award or any right or interest therein is assignable or
transferable except under certain limited exceptions set forth in the Stock
Option Plan.
The Stock Option Plan is administered by the Compensation Committee
(the "Committee"). Pursuant to the terms of the Stock Option Plan, any director,
officer or employee of the Bank or the Company or its affiliates is eligible to
participate. The Committee will determine to whom the awards will be granted, in
what amounts, and the period over which such awards will vest. In granting
awards under the Stock Option Plan, the Committee considers, among other things,
position and years of service, value of the individual's services to the Company
and the Bank and the added responsibilities of such individuals as employees,
directors and officers of a public company and/or its subsidiary. The exercise
price will be at least 100% of the fair market value of the underlying Common
Stock at the time of the grant. The last sale price of the Common Stock on March
13, 2000 was $10.75 per share. The exercise price may be paid in cash or Common
Stock. As of the date of this proxy statement, no determination has been made by
the Committee as to the granting of awards of stock options.
Stock Options. Incentive stock options can only be granted to employees
of the Bank, the Company or an "Affiliate" (i.e., a parent or subsidiary
corporation of the Bank or the Company). The maximum number of shares for which
grants of Incentive Stock Options may be made to any individual employee is
40,000. Nonemployee directors will be granted non-qualified stock options. No
option granted to an employee in connection with the Stock Option Plan will be
exercisable as an Incentive Stock Option subject to incentive tax treatment if
exercised more than three months after the date on which the optionee terminates
employment with the Bank and/or the Company, except as set forth below. In the
event of death or disability, incentive stock options may be exercised and
receive incentive tax treatment for up to at least one year following
termination of employment, subject to the requirements of the Code.
In the event of death, disability or normal retirement of an optionee,
the Company, if requested by the optionee or beneficiary, may elect, in exchange
for the option, to pay the optionee or beneficiary, the amount by which the fair
market value of the Common Stock exceeds the exercise price of the option on the
date of the optionee's termination of service for death, disability or normal
retirement.
Limited Stock Appreciation Rights. The Committee may grant Limited
Rights to employees simultaneously with the grant of any option. A Limited Right
gives the option holder the right, upon a change in control of the Company or
the Bank, to receive the excess of the market value of the shares represented by
the Limited Rights on the date exercised over the exercise price. Limited Rights
generally will be subject to the same terms and conditions and exercisable to
the same extent as stock options, as described above. Payment upon exercise of a
Limited Right will be in cash, or in the event of a change in control in which
pooling accounting treatment is a condition to the transaction, for shares of
stock of the Company, or in the event of a merger transaction, for shares of the
acquiring corporation or its parent, as applicable.
<PAGE>
Limited Rights may be granted at the time of, and must be related to,
the grant of a stock option. The exercise of one will reduce to that extent the
number of shares represented by the other. If a Limited Right is granted with
and related to an Incentive Stock Option the Limited Right must satisfy all the
restrictions and limitations to which the related Incentive Stock Option is
subject.
Dividend Equivalent Rights. Dividend equivalent rights may also be
granted at the time of the grant of a stock option. Dividend equivalent rights
entitle the option holder to receive an amount of cash at the time that certain
extraordinary dividends are declared equal to the amount of the extraordinary
dividend multiplied by the number of options that the person holds. For these
purposes, an extraordinary dividend is defined under the Stock Option Plan as
any dividend paid on shares of Common Stock where the rate of dividend exceeds
the Bank's weighted average cost of funds on interest-bearing liabilities for
the current and preceding three quarters.
12
<PAGE>
Reload Options. Reload options may also be granted at the time of the
grant of a stock option. Reload options entitle the option holder, who has
delivered shares that he or she owns as payment of the exercise price for option
stock, to a new option to acquire additional shares equal in amount to the
shares he or she has traded in. Reload options may also be granted to replace
option shares retained by the employer for payment of the option holder's
withholding tax. The option price at which additional shares of stock can be
purchased by the option holder through the exercise of a reload option is equal
to the market value of the previously owned stock at the time it was surrendered
to the employer. The option period during which the reload option may be
exercised expires at the same time as that of the original option that the
holder has exercised.
Effect of Adjustments. Shares as to which awards may be granted under
the Stock Option Plan, and shares then subject to awards, will be adjusted by
the Committee in the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination or exchange of shares
or other change in the corporate structure of the Company.
Amendment and Termination. The Board may at any time amend, suspend or
terminate the Stock Option Plan or any portion thereof, provided, however, that
no such amendment, suspension or termination shall impair the rights of any
individual, without his consent, in any Award made pursuant to the Plan. Unless
previously terminated, the Stock Option Plan shall continue in effect for a term
of ten years, after which no further awards may be granted under the Stock
Option Plan.
Federal Income Tax Consequences. Under present federal income tax laws,
awards under the Stock Option Plan will have the following consequences:
(1) The grant of an award, by itself, will neither result in the
recognition of taxable income to the recipient nor entitle the Company
to a deduction at the time of such grant.
(2) The exercise of a stock option which is an "Incentive Stock Option"
within the meaning of Section 422 of the Code will generally not, by
itself, result in the recognition of taxable income to the individual
nor entitle the Company to a deduction at the time of such exercise.
However, the difference between the exercise price and the fair market
value of the option shares on the date of exercise is an item of tax
preference which may, in certain situations, trigger the alternative
minimum tax.
(3) The sale of an Incentive Stock Option share prior to the applicable
holding period, i.e., the longer of two years from the date of grant of
the Incentive Stock Option or one year from the date of exercise, will
cause any gain to be taxed at ordinary income tax rates, with respect
to the spread between the exercise price and the fair market value of
the share on the date of exercise and at short term capital gains rates
with respect to any post exercise appreciation in the value of the
share.
(4) The sale of an Incentive Stock Option share after one year from the
date of exercise, will generally result in long term capital gain or
loss.
<PAGE>
(5) The exercise of a stock option which is not an Incentive Stock Option,
i.e., a non-qualified stock option, will result in the recognition of
ordinary income on the date of exercise in an amount equal to the
difference between the exercise price and the fair market value on the
date of exercise of the shares acquired pursuant to the stock option.
(6) The exercise of a Limited Right will result in the recognition of
ordinary income by the individual on the date of exercise in an amount
of cash and/or the fair market value on the date of exercise.
(7) Reload options are of the same type (non-qualified or incentive) as the
option that the option holder exercised. Therefore, the tax
consequences of the reload option are determined under the applicable
tax rules for non- qualified or incentive stock options.
13
<PAGE>
(8) The receipt of a cash payment pursuant to a dividend equivalent right
will result in the recognition of compensation or self-employment
income by the recipient.
(9) The Company will be allowed a deduction at the time, and in the amount
of, any ordinary income recognized by the individual under the various
circumstances described above, provided that the Company meets its
federal withholding tax obligations.
The affirmative vote of the holders of a majority of the votes cast at
the Annual Meeting is required for approval of the Stock Option Plan. The
purpose of obtaining stockholder approval of the Stock Option Plan is to qualify
the plan for the granting of incentive stock options and to satisfy the
requirement for the continued listing of the Company's Common Stock on the
Nasdaq Market. Under regulations issued by the New York State Banking
Department, in order for members of the board of trustees of Oneida Financial
Corp., MHC (all members of the Board of Directors of the Company, except John E.
Haskell, are members of the board of trustees of Oneida Financial Corp., MHC) to
participate in the Stock Option Plan, the affirmative vote of the holders of a
majority of the total shares of Common Stock issued and outstanding, excluding
shares held by Oneida Financial Corp., MHC, is required.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
STOCK OPTION PLAN.
- --------------------------------------------------------------------------------
PROPOSAL III--APPROVAL OF THE
ONEIDA FINANCIAL CORP. 2000 RECOGNITION AND RETENTION PLAN
- --------------------------------------------------------------------------------
General
The Company has established the Oneida Financial Corp.2000 Recognition
and Retention Plan (the "Recognition Plan") as a method of providing certain
employees and nonemployee directors of the Bank, the Company, and their
Affiliates with a proprietary interest in the Company in a manner designed to
encourage such persons to remain with the Bank, the Company, and their
Affiliates and to provide further incentives to achieve corporate objectives.
The following discussion is qualified in its entirety by reference to the
Recognition Plan, the form of which is attached hereto as Appendix B.
The Company intends to contribute 83,238 shares of Common Stock of the
Company to the Recognition Plan, or sufficient funds for the Recognition Plan to
acquire 83,238 shares of Common Stock, which shares will be available to be
awarded to employees and nonemployee directors. These shares may be purchased in
the open market by the Company or the Recognition Plan, or may be contributed by
the Company from authorized but unissued shares.
Principal Features of the Recognition Plan
The Recognition Plan is administered by the Compensation Committee (the
"Committee"). The Committee will select the recipients and terms of awards
pursuant to the Recognition Plan. Pursuant to the terms of the Recognition Plan,
any director, officer or employee of the Bank, the Company or its affiliates may
be selected by the Committee to participate in the Recognition Plan. In
<PAGE>
determining to whom and in what amount to grant awards, the Committee considers
the position and responsibilities of eligible persons, the value of their
services to the Company and the Bank and other factors it deems relevant. The
Recognition Plan provides for the award of shares of Common Stock ("Recognition
Plan Shares") on terms and conditions as determined by the Committee, consistent
with the plan. As of March 13, 2000, there were 10 nonemployee directors
eligible to participate in the Recognition Plan. As of the date of this proxy
statement, no determination has been made by the Committee as to the granting of
Recognition Plan Shares.
In the event a recipient ceases to maintain continuous service (as
defined in the Recognition Plan) with the Company or the Bank by reason of death
or disability, retirement or following a change in control, Recognition Plan
Shares still subject to restrictions will vest and be free of these
restrictions. In the event of termination for any other reason, all nonvested
shares will be forfeited and returned to the Company. Prior to vesting of the
nonvested
14
<PAGE>
Recognition Plan Shares, a recipient will have the right to vote the nonvested
Recognition Plan Shares which have been awarded to the recipient and will
receive any dividends declared on such Recognition Plan Shares. Recognition Plan
Shares are subject to forfeiture if the recipient fails to remain in the
continuous service as an ESOP committee may instruct the trustee regarding
investment of funds contributed to the ESOP. The ESOP trustee, subject to its
fiduciary duty, must vote all allocated shares held in the ESOP in accordance
with the instructions of participating employees. Under the ESOP, nondirected
shares and shares held in the suspense account, are voted in a manner calculated
to most accurately reflect the instructions it has received from participants
regarding the allocated stock so long as such vote is in accordance with the
provisions of ERISA.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
RECOGNITION PLAN
- --------------------------------------------------------------------------------
PROPOSAL IV--RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors of the Company has approved the engagement of
PricewaterhouseCoopers, LLP, to be the Company's auditors for the 2000 fiscal
year, subject to the ratification of the engagement by the Company's
stockholders. At the Meeting, stockholders will consider and vote on the
ratification of the engagement of PricewaterhouseCoopers, LLP, for the Company's
fiscal year ending December 31, 2000. A representative of
PricewaterhouseCoopers, LLP, is expected to attend the Meeting to respond to
appropriate questions and to make a statement if he so desires.
In order to ratify the selection of PricewaterhouseCoopers, LLP, as the
auditors for the 2000 fiscal year, the proposal must receive at least a majority
of the votes cast, either in person or by proxy, in favor of such ratification.
The Board of Directors recommends a vote "FOR" the ratification of
PricewaterhouseCoopers, LLP, as auditors for the 2000 fiscal year.
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials for next
year's Annual Meeting of Shareholders, any shareholder proposal to take action
at such meeting must be received at the Company's executive office, 182 Main
Street, Oneida, New York 13421, no later than November 30, 2000. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than the matters described above in the Proxy Statement.
However, if any matters should properly come before the Annual Meeting, it is
<PAGE>
intended that holders of the proxies will act as directed by a majority of the
Board of Directors, except for matters related to the conduct of the Annual
Meeting, as to which they shall act in accordance with their best judgment. The
Board of Directors intends to exercise its discretionary authority to the
fullest extent permitted under the Securities Exchange Act of 1934.
The Bylaws of the Company provide an advance notice procedure for
certain business, or nominations to the Board of Directors to be brought before
an annual meeting. In order for a stockholder to properly bring business before
an annual meeting, or to propose a nominee to the Board, the stockholder must
give written notice to the Secretary of the Company not less than ninety (90)
days before the date fixed for such meeting; provided, however, that in the
event that less than one hundred (100) days notice or prior public disclosure of
the date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the
15
<PAGE>
Company to include in its proxy statement and proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
The date on which the Annual Meeting of Stockholders is expected to be
held is April 24, 2001. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the 2001 Annual
Meeting of Stockholders must be given to the Company no later than January 22,
2001.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1999 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF
THE RECORD DATE UPON WRITTEN OR TELEPHONIC REQUEST TO ERIC E. STICKELS,
SECRETARY, ONEIDA FINANCIAL CORP., 182 MAIN STREET, ONEIDA, NEW YORK 13421, OR
CALL (315) 363-2000.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Eric E. Stickels
-------------------
Eric E. Stickels
Secretary
Oneida, New York
March 23, 2000
16
<PAGE>
APPENDIX A
ONEIDA FINANCIAL CORP.
2000 STOCK OPTION PLAN
1. Purpose
The purpose of the Oneida Financial Corp. ("Company") 2000 Stock Option
Plan (the "Plan") is to advance the interests of the Company and its
stockholders by providing Key Employees and Outside Directors of the Company and
its Affiliates, including The Oneida Savings Bank ("Bank") and Oneida Financial
MHC, the mutual holding company of the Bank, upon whose judgment, initiative and
efforts the successful conduct of the business of the Company and its Affiliates
largely depends, with an additional incentive to perform in a superior manner as
well as to attract people of experience and ability.
2. Definitions
"Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Bank or the Company, as such terms are defined in Section 424(e) or
424(f), respectively, of the Code, or a successor to a parent corporation or
subsidiary corporation.
"Award" means an Award of Non-Statutory Stock Options, Incentive Stock
Options, Reload Options, Limited Rights, and/or Dividend Equivalent Rights
granted under the provisions of the Plan.
"Beneficiary" means the person or persons designated by a Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, his estate.
"Board" or "Board of Directors" means the board of directors of the
Company or its Affiliate, as applicable.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Bank or the Company shall mean:
(1) a reorganization, merger, merger conversion, consolidation or sale
of all or substantially all of the assets of the Bank or the Company, or a
similar transaction in which the Bank or the Company is not the resulting entity
and that is not approved by a majority of the Board of Directors of the Bank or
the Company;
<PAGE>
(2) individuals who constitute the Incumbent Board cease for any reason
to constitute a majority thereof; provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-fourths of the directors composing the Incumbent Board or whose nomination
for election by the Company's stockholders or members was approved by the same
nominating committee serving under the Incumbent Board shall be, for purposes of
this Section, considered as though he were a member of the Incumbent Board; or
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(3) an acquisition of "control" of the Bank or the Company as defined
in the Bank Holding Company Act of 1956, as amended and applicable rules and
regulations promulgated thereunder as in effect at the time of the Change in
Control (collectively, the "BHCA"), as determined by the Board of Directors of
the Bank or the Company; or
(4) an acquisition of the Company's stock requiring submission of
notice under the change in Bank Control Act; provided, however, that a Change in
Control shall not be deemed to have occurred under (1), (3) or (4) of this
section if the transaction(s) constituting a Change in Control is approved by a
majority of the Board of Directors of the Bank or the Company, as the case may
be.
(5) an event of a nature that would be required to be reported in
response to Item 1(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), or results in a Change in Control of the Bank or the
Company within the meaning of the BHCA; or (b) without limitation shall be
deemed to have occurred at such time as (i) any "person" (as the term is used in
Section 13(d) and 14(d) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13-d under the Exchange Act) directly or indirectly, of
securities of the Company representing 25% or more of the Company's outstanding
securities ordinarily having the right to vote at the election of directors
except for any securities purchased by the Bank's employee stock ownership plan
and trust, (ii) a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Company or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to the plan
or transaction are exchanged or converted into cash or property or securities
not issued by the Company, or (iii) a tender offer is made for 25% or more of
the voting securities of the Company and the shareholders owning beneficially or
of record 25% or more of the outstanding securities of the Company have tendered
or offered to sell their shares pursuant to such tender offer and such tendered
shares have been accepted by the tender offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i) two
or more Non-Employee Directors of the Company, or (ii) the entire Board of the
Company.
"Common Stock" means shares of the common stock of the Company, par
value $.10 per share.
"Continuous Service" means employment as a Key Employee and/or service
as an Outside Director without any interruption or termination of such
employment and/or service with the Company, the Bank or an Affiliate. Continuous
Service shall also mean a continuation as a member of the Board of Directors
following a cessation of employment as a Key Employee. In the case of a Key
Employee, employment shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Bank or in
the case of transfers between payroll locations of the Bank or between the Bank,
its parent, its subsidiaries or its successor.
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"Date of Grant" means the actual date on which an Award is granted by
the Committee.
"Director" means a member of the Board.
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the Committee that it is either not possible to determine when such
Disability will terminate or that it appears probable that such Disability will
be permanent during the remainder of said employee's lifetime.
"Dividend Equivalent Rights" means the right to receive an amount of
cash based upon the terms set forth in Section 10 hereof.
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"Effective Date" means the date of, or a date determined by the Board
following, approval of the Plan by the Company's stockholders.
"Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the reported closing price of the Common Stock as
reported by the Nasdaq stock market (as published by The Wall Street Journal, if
published) on such date, or if the Common Stock was not traded on the day prior
to such date, on the next preceding day on which the Common Stock was traded;
provided, however, that if the Common Stock is not reported on the Nasdaq stock
market, Fair Market Value shall mean the average sale price of all shares of
Common Stock sold during the 30-day period immediately preceding the date on
which such stock option was granted, and if no shares of stock have been sold
within such 30-day period, the average sale price of the last three sales of
Common Stock sold during the 90-day period immediately preceding the date on
which such stock option was granted. In the event Fair Market Value cannot be
determined in the manner described above, then Fair Market Value shall be
determined by the Committee. The Committee is authorized, but is not required,
to obtain an independent appraisal to determine the Fair Market Value of the
Common Stock.
"Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designated as an Incentive Stock Option pursuant to
Section 8.
"Key Employee" means any person who is currently employed by the
Company or an Affiliate who is chosen by the Committee to participate in the
Plan.
"Limited Right" means the right to receive an amount of cash based upon
the terms set forth in Section 9.
"Non-Statutory Stock Option" means an Option granted by the Committee
to (i) an Outside Director or (ii) to any other Participant and such Option is
either (A) not designated by the Committee as an Incentive Stock Option, or (B)
fails to satisfy the requirements of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder.
"Non-Employee Director" means, for purposes of the Plan, a Director who
(a) is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the normal
or early retirement date set forth in the Bank's Employee Stock Ownership Plan,
or any successor plan. Normal Retirement for an Outside Director means a
cessation of service on the Board of Directors for any reason other than removal
for Cause, after reaching 60 years of age and maintaining at least 5 years of
Continuous Service.
"Outside Director" means a Director of the Company or an Affiliate who
is not an employee of the Company or an Affiliate.
"Option" means an Award granted under Section 7 or Section 8.
<PAGE>
"Participant" means a Key Employee or Outside Director of the Company
or its Affiliates who receives or has received an award under the Plan.
"Reload Option" means an option to acquire shares of Common Stock
equivalent to the shares (i) used by a Participant to pay for an Option, or (ii)
deducted from any distribution in order to satisfy income tax required to be
withheld, based upon the terms set forth in Section 19.
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"Termination for Cause" means the termination of employment or
termination of service on the Board caused by the individual's personal
dishonesty, willful misconduct, any breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, or the willful violation
of any law, rule or regulation (other than traffic violations or similar
offenses), or a final cease-and-desist order, any of which results in material
loss to the Company or one of its Affiliates.
3. Plan Administration Restrictions
The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make whatever determinations and interpretations in connection with the Plan
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all Participants in the Plan
and on their legal representatives and beneficiaries.
All transactions involving a grant, award or other acquisition from the
Company shall:
(a) be approved by the Company's full Board or by the Committee; or
(b) be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either: the affirmative vote of the holders of a majority of
the securities present, or represented and entitled to vote at a meeting duly
held in accordance with the laws of the state in which the Company is
incorporated; or the written consent of the holders of a majority of the
securities of the issuer entitled to vote provided that such ratification occurs
no later than the date of the next annual meeting of shareholders; or
(c) result in the acquisition of an Option or Limited Right that is
held by the Participant for a period of six months following the date of such
acquisition.
4. Types of Awards
Awards under the Plan may be granted in any one or a combination of:
(a) Incentive Stock Options; (b) Non-Statutory Stock Options; (c) Limited
Rights; (d) Dividend Equivalent Rights and (e) Reload Options.
5. Stock Subject to the Plan
Subject to adjustment as provided in Section 17, the maximum number of
shares reserved for issuance under the Plan is 166,475 shares. To the extent
that Options or rights granted under the Plan are exercised, the shares covered
will be unavailable for future grants under the Plan; to the extent that Options
together with any related rights granted under the Plan terminate, expire or are
canceled without having been exercised or, in the case of Limited Rights
exercised for cash, new Awards may be made with respect to these shares. In
addition, any shares that are used for the full or partial payment of the
exercise price of any option in connection with a Reload Option will be
available for future grants under the Plan.
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6. Eligibility
Key Employees of the Company and its Affiliates shall be eligible to
receive Incentive Stock Options, Non-Statutory Stock Options, Limited Rights,
Dividend Equivalent Rights and/or Reload Options under the Plan. Outside
Directors shall be eligible to receive Non-Statutory Stock Options, Dividend
Equivalent Rights and Reload Options under the Plan.
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7. Non-Statutory Stock Options
(a) Grants to Outside Directors and Key Employees. The Committee may,
from time to time, grant Non-Statutory Stock Options to eligible Key Employees
and Outside Directors, and, upon such terms and conditions as the Committee may
determine, grant Non-Statutory Stock Options in exchange for and upon surrender
of previously granted Awards under the Plan. Non-Statutory Stock Options granted
under the Plan, including Non-Statutory Stock Options granted in exchange for
and upon surrender of previously granted Awards, are subject to the terms and
conditions set forth in this Section 7.
(b) Option Agreement. Each Option shall be evidenced by a written
option agreement between the Company and the Participant specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing the terms and conditions of the option which shall not be
inconsistent with the terms of the Plan.
(c) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Non-Statutory Stock Option shall be the Fair Market
Value of the Common Stock of the Company on the date the Option is granted.
Shares may be purchased only upon full payment of the purchase price in one or
more of the manners set forth in Section 13 hereof, as determined by the
Committee.
(d) Manner of Exercise and Vesting. A Non-Statutory Stock Option
granted under the Plan shall vest in a Participant at the rate or rates
determined by the Committee. A vested Option may be exercised from time to time,
in whole or in part, by delivering a written notice of exercise to the President
or Chief Executive Officer of the Company, or his designee. Such notice shall be
irrevocable and must be accompanied by full payment of the purchase price in
cash or shares of Common Stock at the Fair Market Value of such shares,
determined on the exercise date in the manner described in Section 2 hereof. If
previously acquired shares of Common Stock are tendered in payment of all or
part of the exercise price, the value of such shares shall be determined as of
the date of such exercise.
(e) Terms of Options. The term during which each Non-Statutory Stock
Option may be exercised shall be determined by the Committee, but in no event
shall a Non-Statutory Stock Option be exercisable in whole or in part more than
10 years from the Date of Grant. No Options shall be earned by a Participant
unless the Participant maintains Continuous Service until the vesting date of
such Option, except as set forth herein. The shares comprising each installment
may be purchased in whole or in part at any time after such installment becomes
purchasable. The Committee may, in its sole discretion, accelerate or extend the
time at which any Non-Statutory Stock Option may be exercised in whole or in
part by Key Employees and/or Outside Directors. Notwithstanding any other
provision of this Plan, in the event of a Change in Control of the Company or
the Bank, all Non-Statutory Stock Options that have been awarded shall become
immediately exercisable for three years following such Change in Control.
(f) Termination of Employment or Service. Upon the termination of a Key
Employee's employment or upon termination of an Outside Director's service for
any reason other than Normal Retirement, death, Disability, Change in Control or
Termination for Cause, the Participant's Non-Statutory Stock Options shall be
exercisable only as to those shares that were immediately purchasable on the
date of termination and only for three months following termination. In the
event of Termination for Cause, all rights under a Participant's Non-Statutory
Stock Options shall expire upon termination. In the event of termination of
<PAGE>
service or employment due to the Normal Retirement, death or Disability of any
Participant, all Non-Statutory Stock Options held by the Participant, whether or
not exercisable at such time, shall be exercisable by the Participant or his
legal representative or beneficiaries for one year following the date of his
termination due to Normal Retirement, death or Disability, provided that in no
event shall the period extend beyond the expiration of the Non-Statutory Stock
Option term.
(g) Transferability. In the discretion of the Board, all or any
Non-Statutory Stock Option granted hereunder may be transferable by the
Participant once the Option has vested in the Participant, provided, however,
that the Board may limit the transferability of such Option or Options to a
designated class or classes of persons.
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8. Incentive Stock Options
The Committee may, from time to time, grant Incentive Stock Options to
Key Employees. Incentive Stock Options granted pursuant to the Plan shall be
subject to the following terms and conditions:
(a) Option Agreement. Each Option shall be evidenced by a written
option agreement between the Company and the Key Employee specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of the Plan.
(b) Price. Subject to Section 17 of the Plan and Section 422 of the
Code, the purchase price per share of Common Stock deliverable upon the exercise
of each Incentive Stock Option shall be not less than 100% of the Fair Market
Value of the Common Stock on the date the Incentive Stock Option is granted.
However, if a Key Employee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its Affiliates
(or under Section 424(d) of the Code is deemed to own stock representing more
than 10% of the total combined voting power of all classes of stock of the
Company or its Affiliates by reason of the ownership of such classes of stock,
directly or indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such Key Employee, or by or for any corporation,
partnership, estate or trust of which such Key Employee is a shareholder,
partner or Beneficiary), the purchase price per share of Common Stock
deliverable upon the exercise of each Incentive Stock Option shall not be less
than 110% of the Fair Market Value of the Common Stock on the date the Incentive
Stock Option is granted. Shares may be purchased only upon payment of the full
purchase price in one or more of the manners set forth in Section 13 hereof, as
determined by the Committee.
(c) Manner of Exercise. Incentive Stock Options granted under the Plan
shall vest in a Participant at the rate or rates determined by the Committee.
The vested Options may be exercised from time to time, in whole or in part, by
delivering a written notice of exercise to the President or Chief Executive
Officer of the Company or his designee. Such notice is irrevocable and must be
accompanied by full payment of the purchase price in cash or shares of Common
Stock at the Fair Market Value of such shares determined on the exercise date by
the manner described in Section 2.
The Committee may, in its sole discretion, accelerate the time at which
any Incentive Stock Option may be exercised in whole or in part, provided that
it is consistent with the terms of Section 422 of the Code. Notwithstanding the
above, in the event of a Change in Control, all Incentive Stock Options that
have been awarded shall become immediately exercisable, unless the aggregate
exercise price of the amount exercisable as a result of a Change in Control,
together with the aggregate exercise price of all other Incentive Stock Options
first exerciseable in the year in which the Change in Control occurs, shall
exceed $100,000 (determined as of the Date of Grant). In such event, the first
$100,000 of Incentive Stock Options (determined as of the Date of Grant) shall
be exercisable as Incentive Stock Options and any excess shall be exercisable as
Non-Statutory Stock Options but shall remain subject to the provisions of this
Section 8 to the extent permitted.
<PAGE>
(d) Amounts of Options. Incentive Stock Options may be granted to any
eligible Key Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with the terms of Section 422 of the Code.
Notwithstanding the above, the maximum number of shares that may be subject to
an Incentive Stock Option awarded under the Plan to any Key Employee shall be
40,000. In granting Incentive Stock Options, the Committee shall consider such
factors as it deems relevant, which factors may include, among others, the
position and responsibilities of the Key Employee, the length and value of his
or her service to the Bank, the Company, or the Affiliate, the compensation paid
to the Key Employee and the Committee's evaluation of the performance of the
Bank, the Company, or the Affiliate, according to measurements that may include,
among others, key financial ratios, levels of classified assets, and independent
audit findings. In the case of an Option intended to qualify as an Incentive
Stock Option, the aggregate Fair Market Value (determined as of the time the
Option is granted) of the Common Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant during any
calendar year (under all plans of the Company and its Affiliates) shall not
exceed $100,000. The provisions of this
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Section 8(d) shall be construed and applied in accordance with Section 422(d) of
the Code and the regulations, if any, promulgated thereunder.
(e) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Committee, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than 10 years
from the Date of Grant. If any Key Employee, at the time an Incentive Stock
Option is granted to him, owns stock representing more than 10% of the total
combined voting power of all classes of stock of the Company or its Affiliate
(or, under Section 424(d) of the Code, is deemed to own stock representing more
than 10% of the total combined voting power of all classes of stock, by reason
of the ownership of such classes of stock, directly or indirectly, by or for any
brother, sister, spouse, ancestor or lineal descendent of such Key Employee, or
by or for any corporation, partnership, estate or trust of which such Key
Employee is a shareholder, partner or Beneficiary), the Incentive Stock Option
granted to him shall not be exercisable after the expiration of five years from
the Date of Grant. Notwithstanding any other provision of this Plan, in the
event of a Change in Control of the Company or the Bank, all Incentive Stock
Options that have been awarded shall become immediately exercisable for three
years following such Change in Control.
(f) Termination of Employment. Upon the termination of a Key Employee's
service for any reason other than Disability, Normal Retirement, Change in
Control, death or Termination for Cause, the Key Employee's Incentive Stock
Options shall be exercisable only as to those shares that were immediately
purchasable by such Key Employee at the date of termination and only for a
period of three months following termination. In the event of Termination for
Cause all rights under the Incentive Stock Options shall expire upon
termination.
Upon termination of a Key Employee's employment due to Normal
Retirement, death or Disability, all Incentive Stock Options held by such Key
Employee, whether or not exercisable at such time, shall be exercisable for a
period of one year following the date of his cessation of employment, provided
however, that any such Option shall not be eligible for treatment as an
Incentive Stock Option in the event such Option is exercised more than three
months following the date of his Normal Retirement or termination of employment
following a Change in Control; and provided further, that no Option shall be
eligible for treatment as an Incentive Stock Option in the event such Option is
exercised more than one year following termination of employment due to
Disability and provided further, in order to obtain Incentive Stock Option
treatment for Options exercised by heirs or devisees of an Optionee, the
Optionee's death must have occurred while employed or within three (3) months of
termination of employment. In no event shall the exercise period extend beyond
the expiration of the Incentive Stock Option term.
(g) Transferability. No Incentive Stock Option granted under the Plan
is transferable except by will or the laws of descent and distribution and is
exercisable during his lifetime only by the Key Employee to which it is granted.
(h) Compliance with Code. The options granted under this Section 8 are
intended to qualify as Incentive Stock Options within the meaning of Section 422
of the Code, but the Company makes no warranty as to the qualification of any
Option as an Incentive Stock Option within the meaning of Section 422 of the
Code. If an Option granted hereunder fails for whatever reason to comply with
the provisions of Section 422 of the Code, and such failure is not or cannot be
cured, such Option shall be a Non-Statutory Stock Option.
<PAGE>
9. Limited Rights
The Committee may grant a Limited Right simultaneously with the grant
of any Option to any Key Employee, with respect to all or some of the shares
covered by such Option. Limited Rights granted under the Plan are subject to the
following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable
in whole or in part before the expiration of six months from the date of grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control.
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The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise price of the related
Option.
Upon exercise of a Limited Right, the related Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the exercise price and the Fair Market Value of the Common
Stock subject to the underlying Option. The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall
promptly receive from the Company an amount of cash equal to the difference
between the Fair Market Value on the Date of Grant of the related Option and the
Fair Market Value of the underlying shares on the date the Limited Right is
exercised, multiplied by the number of shares with respect to which such Limited
Right is being exercised. In the event of a Change in Control in which pooling
accounting treatment is a condition to the transaction, the Limited Right shall
be exercisable solely for shares of stock of the Company, or in the event of a
merger transaction, for shares of the acquiring corporation or its parent, as
applicable. The number of shares to be received on the exercise of such Limited
Right shall be determined by dividing the amount of cash that would have been
available under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the Option subject to the Limited Right.
10. Dividend Equivalent Rights
Simultaneously with the grant of any Option to a Participant, the
Committee may grant a Dividend Equivalent Right with respect to all or some of
the shares covered by such Option. Dividend Equivalent Rights granted under this
Plan are subject to the following terms and conditions:
(a) Terms of Rights. The Dividend Equivalent Right provides the
Participant with a cash benefit per share for each share underlying the
unexercised portion of the related Option equal to the amount of any
extraordinary dividend (as defined in Section 10(c)) per share of Common Stock
declared by the Company. The terms and conditions of any Dividend Equivalent
Right shall be evidenced in the Option agreement entered into with the
Participant and shall be subject to the terms and conditions of the Plan. The
Dividend Equivalent Right is transferable only when the related Option is
transferable and under the same conditions.
(b) Payment. Upon the payment of an extraordinary dividend, the
Participant holding a Dividend Equivalent Right with respect to Options or
portions thereof which have vested shall promptly receive from the Company the
amount of cash equal to the amount of the extraordinary dividend per share of
Common Stock, multiplied by the number of shares of Common Stock underlying the
unexercised portion of the related Option. With respect to options or portions
thereof which have not vested, the amount that would have been received pursuant
to the Dividend Equivalent Right with respect to the shares underlying such
unvested Option or portion thereof shall be paid to the Participant holding such
Dividend Equivalent Right together with earnings thereon, on such date as the
Option or portion thereof becomes vested. Payments shall be decreased by the
amount of any applicable tax withholding prior to distribution to the
Participant as set forth in Section 19.
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(c) Extraordinary Dividend. For purposes of this Section 10, an
extraordinary dividend is any dividend paid on shares of Common Stock where the
rate of the dividend exceeds the Bank's weighted average cost of funds on
interest-bearing liabilities for the current and preceding three quarters.
11. Reload Option
Simultaneously with the grant of any Option to a Participant, the
Committee may grant a Reload Option with respect to all or some of the shares
covered by such Option. A Reload Option may be granted to a Participant who
satisfies all or part of the exercise price of the Option with shares of Common
Stock (as described in Section 13(c)
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below). The Reload Option represents an additional option to acquire the same
number of shares of Common Stock as is used by the Participant to pay for the
original Option. Reload Options may also be granted to replace Common Stock
withheld by the Company for payment of a Participant's withholding tax under
Section 19. A Reload Option is subject to all of the same terms and conditions
as the original Option except that (i) the exercise price of the shares of
Common Stock subject to the Reload Option will be determined at the time the
original Option is exercised and (ii) such Reload Option will conform to all
provisions of the Plan at the time the original Option is exercised.
12. Surrender of Option
In the event of a Participant's termination of employment or
termination of service as a result of death, Disability or Normal Retirement,
the Participant (or his or her personal representative(s), heir(s), or
devisee(s)) may, in a form acceptable to the Committee make application to
surrender all or part of the Options held by such Participant in exchange for a
cash payment from the Company of an amount equal to the difference between the
Fair Market Value of the Common Stock on the date of termination of employment
or the date of termination of service on the Board and the exercise price per
share of the Option. Whether the Committee accepts such application or
determines to make payment, in whole or part, is within its absolute and sole
discretion, it being expressly understood that the Committee is under no
obligation to any Participant whatsoever to make such payments. In the event
that the Committee accepts such application and determines to make payment, such
payment shall be in lieu of the exercise of the underlying Option and such
Option shall cease to be exercisable.
13. Alternate Option Payment Mechanism
The Committee has sole discretion to determine what form of payment it
will accept for the exercise of an Option. The Committee may indicate acceptable
forms in the agreement with the Participant covering such Options or may reserve
its decision to the time of exercise. No Option is to be considered exercised
until payment in full is accepted by the Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by
certified check. To the extent permitted by law, the Committee may permit all or
a portion of the exercise price of an Option to be paid through borrowed funds.
(b) Cashless Exercise. Subject to vesting requirements, if applicable,
a Participant may engage in a "cashless exercise" of the Option. Upon a cashless
exercise, the Participant shall give the Company written notice of the exercise
of the Option together with an order to a registered broker-dealer or equivalent
third party, to sell part or all of the Common Stock subject to the Option and
to deliver enough of the proceeds to the Company to pay the Option exercise
price and any applicable withholding taxes. If the Participant does not sell the
Common Stock subject to the Option through a registered broker-dealer or
equivalent third party, the Optionee can give the Company written notice of the
exercise of the Option and the third party purchaser of the Common Stock subject
to the Option shall pay the Option exercise price plus applicable withholding
taxes to the Company.
(c) Exchange of Common Stock. The Committee may permit payment of the
Option exercise price by the tendering of previously acquired shares of Common
Stock. All shares of Common Stock tendered in payment of the exercise price of
an Option shall be valued at the Fair Market Value of the Common Stock on the
<PAGE>
date prior to the date of exercise. No tendered shares of Common Stock which
were acquired by the Participant upon the previous exercise of an Option or as
awards under a stock award plan (such as the Company's Recognition and Retention
Plan) shall be accepted for exchange unless the Participant has held such shares
(without restrictions imposed by said plan or award) for at least six months
prior to the exchange.
14. Rights of a Stockholder
A Participant shall have no rights as a stockholder with respect to any
shares covered by a Non-Statutory and/or Incentive Stock Option until the date
of issuance of a stock certificate for such shares. Nothing in the Plan or
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in any Award granted confers on any person any right to continue in the employ
of the Company or its Affiliates or to continue to perform services for the
Company or its Affiliates or interferes in any way with the right of the Company
or its Affiliates to terminate his services as an officer, director or employee
at any time.
15. Agreement with Participants
Each Award of Options, Reload Options, Limited Rights and/or Dividend
Equivalent Rights will be evidenced by a written agreement, executed by the
Participant and the Company or its Affiliates that describes the conditions for
receiving the Awards including the date of Award, the purchase price, applicable
periods, and any other terms and conditions as may be required by the Board or
applicable securities law.
16. Designation of Beneficiary
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Option, Reload Option,
Limited Rights Award or Dividend Equivalent Rights to which he would then be
entitled. Such designation will be made upon forms supplied by and delivered to
the Company and may be revoked in writing. If a Participant fails effectively to
designate a Beneficiary, then his estate will be deemed to be the Beneficiary.
17. Dilution and Other Adjustments
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, pro rata return of capital to all
shareholders, recapitalization, or any merger, consolidation, spin-off,
reorganization, combination or exchange of shares, or other corporate change, or
other increase or decrease in such shares, without receipt or payment of
consideration by the Company, the Committee shall make such adjustments to
previously granted Awards, to prevent dilution or enlargement of the rights of
the Participant, including any or all of the following:
(a) adjustments in the aggregate number of shares of Common Stock
that may be awarded under the Plan;
(b) adjustments in the aggregate number of shares of Common Stock
that may be awarded to any single individual under the Plan;
(c) adjustments in the aggregate number of shares of Common Stock
covered by Awards already made under the Plan; or
(d) adjustments in the purchase price of outstanding Incentive
and/or Non-Statutory Stock Options, or any Related Options or
any Limited Rights attached to such Options.
No such adjustments may, however, materially change the value of
benefits available to a Participant under a previously granted Award. With
respect to Incentive Stock Options, no such adjustment shall be made if it would
be deemed a "modification" of the Award under Section 424 of the Code.
18. Effect of a Change in Control on Option Awards
In the event of a Change in Control, the Committee and the Board of
Directors will take one or more of the following actions to be effective as of
the date of such Change in Control:
<PAGE>
(a) provide that such Options shall be assumed, or equivalent options
shall be substituted ("Substitute Options") by the acquiring or succeeding
corporation (or an affiliate thereof), provided that: (A) any such Substitute
Options exchanged for Incentive Stock Options shall meet the requirements of
Section 424(a) of the Code, and (B)
A-10
<PAGE>
the shares of stock issuable upon the exercise of such Substitute Options shall
constitute securities registered in accordance with the Securities Act of 1933,
as amended ("1933 Act") or such securities shall be exempt from such
registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act,
(collectively, "Registered Securities"), or in the alternative, if the
securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the Participant will receive upon
consummation of the Change in Control a cash payment for each Option surrendered
equal to the difference between the (1) Fair Market Value of the consideration
to be received for each share of Common Stock in the Change in Control times the
number of shares of Common Stock subject to such surrendered Options, and (2)
the aggregate exercise price of all such surrendered Options, or
(b) in the event of a transaction under the terms of which the holders
of Common Stock will receive upon consummation thereof a cash payment (the
"Merger Price") for each share of Common Stock exchanged in the Change in
Control transaction, make or provide for a cash payment to the Participants
equal to the difference between (A) the Merger Price times the number of shares
of Common Stock subject to such Options held by each Optionee (to the extent
then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such surrendered Options in exchange for such
surrendered Options.
19. Withholding
There may be deducted from each distribution of cash and/or Common
Stock under the Plan the amount of tax required by any governmental authority to
be withheld. Shares of Common Stock shall be withheld where required from any
distribution of Common Stock.
20. Amendment of the Plan
The Board may at any time, and from time to time, modify or amend the
Plan in any respect, or modify or amend an Award received by Key Employees
and/or Outside Directors; provided, however, that no such termination,
modification or amendment may affect the rights of a Participant, without his
consent, under an outstanding Award. Any amendment or modification of the Plan
or an outstanding Award under the Plan, including but not limited to the
acceleration of vesting of an outstanding Award for reasons other than death,
Disability, Normal Retirement, or a Change in Control, shall be approved by the
Committee or the full Board of the Company.
21. Effective Date of Plan
The Plan shall become effective upon the date of, or a date determined
by the Board of Directors following, approval of the Plan by the Company's
stockholders.
22. Termination of the Plan
The right to grant Awards under the Plan will terminate upon the
earlier of (i) 10 years after the Effective Date, or (ii) the date on which the
exercise of Options or related Rights equaling the maximum number of shares
reserved under the Plan occurs, as set forth in Section 5. The Board may suspend
or terminate the Plan at any time, provided that no such action will, without
the consent of a Participant, adversely affect his rights under a previously
granted Award.
<PAGE>
23. Applicable Law
The Plan will be administered in accordance with the laws of the State
of Delaware.
A-11
<PAGE>
IN WITNESS WHEREOF, the Company has caused the Plan to be executed by
its duly authorized officers and the corporate seal to be affixed and duly
attested, as of the ____ day of ________, 2000.
Date Approved by Stockholders: __________
Effective Date: _____________
ATTEST: ONEIDA FINANCIAL CORP.
_________________ _______________________
Secretary Chief Executive Officer
A-12
<PAGE>
APPENDIX B
ONEIDA FINANCIAL CORP.
2000 RECOGNITION AND RETENTION PLAN
1. Establishment of the Plan
Oneida Financial Corp. (the "Company") hereby establishes the Oneida
Financial Corp. 2000 Recognition and Retention Plan (the "Plan") upon the terms
and conditions hereinafter stated in the Plan.
2. Purpose of the Plan
The purpose of the Plan is to advance the interests of the Company and
its stockholders by providing Key Employees and Outside Directors of the Company
and its Affiliates, including The Oneida Savings Bank (the "Bank") and Oneida
Financial MHC, the mutual holding company of the Bank, upon whose judgment,
initiative and efforts the successful conduct of the business of the Company and
its Affiliates largely depends, with compensation for their contributions to the
Company and its Affiliates and an additional incentive to perform in a superior
manner, as well as to attract people of experience and ability.
3. Definitions
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural:
"Affiliate"" means any "parent corporation" or "subsidiary corporation"
of the Bank or the Company, as such terms are defined in Section 424(e) and (f),
respectively, of the Code, or a successor to a parent corporation or subsidiary
corporation.
"Award" means the grant by the Committee of Restricted Stock, as
provided in the Plan.
"Beneficiary" means the person or persons designated by a Recipient to
receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
"Board" or "Board of Directors" means the Board of Directors of the
Company or an Affiliate, as applicable. For purposes of Section 4 of the Plan,
"Board" shall refer solely to the Board of the Company.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Bank or the Company shall mean:
<PAGE>
(1) a reorganization, merger, merger conversion, consolidation or sale
of all or substantially all of the assets of the Bank or the Company, or a
similar transaction in which the Bank or the Company is not the resulting entity
and that is not approved by a majority of the Board of Directors of the Bank or
the Company;
B-1
<PAGE>
(2) individuals who constitute the Incumbent Board cease for any reason
to constitute a majority thereof; provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-fourths of the directors composing the Incumbent Board or whose nomination
for election by the Company's stockholders or members was approved by the same
nominating committee serving under the Incumbent Board shall be, for purposes of
this Section, considered as though he were a member of the Incumbent Board; or
(3) an acquisition of "control" of the Bank or the Company as defined
in the Bank Holding Company Act of 1956, as amended and applicable rules and
regulations promulgated thereunder as in effect at the time of the Change in
Control (collectively, the "BHCA"), as determined by the Board of Directors of
the Bank or the Company; or
(4) an acquisition of the Company's stock requiring submission of
notice under the change in Bank Control Act; provided, however, that a Change in
Control shall not be deemed to have occurred under (1), (3) or (4) of this
section if the transaction(s) constituting a Change in Control is approved by a
majority of the Board of Directors of the Bank or the Company, as the case may
be; or
(5) an event of a nature that would be required to be reported in
response to Item 1(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), or results in a Change in Control of the Bank or the
Company within the meaning of the BHCA; or (b) without limitation shall be
deemed to have occurred at such time as (i) any "person" (as the term is used in
Section 13(d) and 14(d) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13-d under the Exchange Act) directly or indirectly, of
securities of the Company representing 25% or more of the Company's outstanding
securities ordinarily having the right to vote at the election of directors
except for any securities purchased by the Bank's employee stock ownership plan
and trust, (ii) a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Company or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to the plan
or transaction are exchanged or converted into cash or property or securities
not issued by the Company, or (iii) a tender offer is made for 25% or more of
the voting securities of the Company and the shareholders owning beneficially or
of record 25% or more of the outstanding securities of the Company have tendered
or offered to sell their shares pursuant to such tender offer and such tendered
shares have been accepted by the tender offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i) two
or more Non-Employee Directors of the Company, or (ii) the entire Board of the
Company.
"Common Stock" means shares of the common stock of the Company, par
value $.10 per share.
"Continuous Service" means employment as a Key Employee and/or service
as an Outside Director without any interruption or termination of such
employment and/or service. Continuous Service shall also mean a continuation as
a member of the Board of Directors following a cessation of employment as a Key
<PAGE>
Employee. In the case of a Key Employee, employment shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Bank or in the case of transfers between payroll
locations of the Bank or between the Bank, its parent, its subsidiaries or its
successor.
"Director" means a member of the Board.
B-2
<PAGE>
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the Committee that it is either not possible to determine when such
Disability will terminate or that it appears probable that such Disability will
be permanent during the remainder of such employee's lifetime.
"Effective Date" means the date of, or a date determined by the Board
of Directors following, approval of the Plan by the Company's stockholders.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Key Employee" means any person who is currently employed by the
Company or an Affiliate who is chosen by the Committee to participate in the
Plan.
"Non-Employee Director" means, for purposes of the Plan, a Director who
(a) is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the normal
or early retirement date set forth in the Bank's Employee Stock Ownership Plan,
or any successor plan. Normal Retirement for an Outside Director means a
cessation of service on the Board of Directors for any reason other than removal
for Cause, after reaching 60 years of age and maintaining at least 5 years of
Continuous Service.
"Outside Director" means a Director of the Company or an Affiliate who
is not an employee of the Company or an Affiliate.
"Recipient" means a Key Employee or Outside Director of the Company or
its Affiliates who receives or has received an Award under the Plan.
"Restricted Period" means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 6
with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" means shares of Common Stock that have been
contingently awarded to a Recipient by the Committee subject to the restrictions
referred to in Section 6, so long as such restrictions are in effect.
4. Administration of the Plan.
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall have all of the powers allocated to it
in the Plan. The interpretation and construction by the Committee of any
provisions of the Plan or of any Award granted hereunder shall be final and
binding. The Committee shall act by vote or written consent of a majority of its
members. Subject to the express provisions and limitations of the Plan, the
Committee may adopt such rules and procedures as it deems appropriate for the
conduct of its affairs. The Committee shall report its actions and decisions
with respect to the Plan to the Board at appropriate times, but in no event less
than one time per calendar year.
<PAGE>
4.02 Role of the Board. The members of the Committee shall be appointed
or approved by, and will serve at the pleasure of, the Board. The Board may in
its discretion from time to time remove members from, or add members to, the
Committee. The Board shall have all of the powers allocated to it in the Plan,
may take any action under or with respect to the Plan that the Committee is
authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
except as provided in Section 6.02, the Board may not revoke any Award except in
the event of revocation for Cause or with respect to unearned Awards in the
event the Recipient of an Award voluntarily terminates employment with the
Company prior to Normal Retirement.
B-3
<PAGE>
4.03 Plan Administration Restrictions. All transactions involving a
grant, award or other acquisitions from the Company shall:
(a) be approved by the Company's full Board or by the Committee;
(b) be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either the affirmative vote of the holders of a majority of the
shares present, or represented and entitled to vote at a meeting duly held in
accordance with the laws under which the Company is incorporated or the written
consent of the holders of a majority of the securities of the issuer entitled to
vote provided that such ratification occurs no later than the date of the next
annual meeting of shareholders; or
(c) result in the acquisition of Common Stock that is held by the
Recipient for a period of six months following the date of such acquisition.
4.04 Limitation on Liability. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Awards granted under it. If a member of the Board or the Committee
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Bank or the Company shall indemnify such
member against expense (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Bank and the Company and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
5. Eligibility; Awards
5.01 Eligibility. Key Employees and Outside Directors are eligible to
receive Awards.
5.02 Awards to Key Employees and Outside Directors. The Committee may
determine which of the Key Employees and Outside Directors referenced in Section
5.01 will be granted Awards and the number of shares covered by each Award;
provided, however, that in no event shall any Awards be made that will violate
the Bank's Restated Organization Certificate and Bylaws, the Company's
Certificate of Incorporation and Bylaws, or any applicable federal or state law
or regulation. Shares of Restricted Stock that are awarded by the Committee
shall, on the date of the Award, be registered in the name of the Recipient and
transferred to the Recipient, in accordance with the terms and conditions
established under the Plan. The aggregate number of shares that shall be issued
under the Plan is 83,237.
In the event Restricted Stock is forfeited for any reason, the
Committee, from time to time, may determine which of the Key Employees and
Outside Directors will be granted additional Awards to be awarded from forfeited
Restricted Stock.
In selecting those Key Employees and Outside Directors to whom Awards
will be granted and the amount of Restricted Stock covered by such Awards, the
Committee shall consider such factors as it deems relevant, which factors may
include, among others, the position and responsibilities of the Key Employees
and Outside Directors, the length and value of their services to the Bank and
its Affiliates, the compensation paid to the Key Employees or fees paid to the
<PAGE>
Outside Directors, and the Committee may request the written recommendation of
the Chief Executive Officer and other senior executive officers of the Bank, the
Company and its Affiliates or the recommendation of the full Board. All
allocations by the Committee shall be subject to review, and approval or
rejection, by the Board.
No Restricted Stock shall be earned unless the Recipient maintains
Continuous Service with the Company or an Affiliate until the restrictions
lapse.
B-4
<PAGE>
5.03 Manner of Award. As promptly as practicable after a determination
is made pursuant to Section 5.02 to grant an Award, the Committee shall notify
the Recipient in writing of the grant of the Award, the number of shares of
Restricted Stock covered by the Award, and the terms upon which the Restricted
Stock subject to the Award may be earned. Upon notification of an Award of
Restricted Stock, the Recipient shall execute and return to the Company a
restricted stock agreement (the "Restricted Stock Agreement") setting forth the
terms and conditions under which the Recipient shall earn the Restricted Stock,
together with a stock power or stock powers endorsed in blank. Thereafter, the
Recipient's Restricted Stock and stock power shall be deposited with an escrow
agent specified by the Company ("Escrow Agent") who shall hold such Restricted
Stock under the terms and conditions set forth in the Restricted Stock
Agreement. Each certificate in respect of shares of Restricted Stock Awarded
under the Plan shall be registered in the name of the Recipient.
5.04 Treatment of Forfeited Shares. In the event shares of Restricted
Stock are forfeited by a Recipient, such shares shall be returned to the Company
and shall be held and accounted for pursuant to the terms of the Plan until such
time as the Restricted Stock is re-awarded to another Recipient, in accordance
with the terms of the Plan and the applicable state and federal laws, rules and
regulations.
6. Terms and Conditions of Restricted Stock
The Committee shall have full and complete authority, subject to the
limitations of the Plan, to grant awards of Restricted Stock to Key Employees
and Outside Directors and, in addition to the terms and conditions contained in
Sections 6.01 through 6.08, to provide such other terms and conditions (which
need not be identical among Recipients) in respect of such Awards, and the
vesting thereof, as the Committee shall determine.
6.01 General Rules. Restricted stock granted under the Plan shall vest
in a Recipient at the rate or rates determined by the Committee. Subject to any
such other terms and conditions as the Committee shall provide with respect to
Awards, shares of Restricted Stock may not be sold, assigned, transferred
(within the meaning of Code Section 83), pledged or otherwise encumbered by the
Recipient, except as hereinafter provided, during the Restricted Period. The
Committee shall have the authority, in its discretion, to accelerate the time at
which any or all of the restrictions shall lapse with respect to a Restricted
Stock Award, or to remove any or all of such restrictions.
6.02 Continuous Service; Forfeiture. Except as provided in Section
6.03, a Recipient must maintain Continuous Service throughout the vesting period
of the award in order to vest in all shares of Restricted Stock awarded
hereunder. If a Recipient ceases to maintain Continuous Service for any reason
(other than death, Disability, Change in Control or Normal Retirement), unless
the Committee shall otherwise determine, all shares of Restricted Stock
theretofore awarded to such Recipient and which at the time of such termination
of Continuous Service are subject to the restrictions imposed by Section 6.01
shall, upon such termination of Continuous Service, be forfeited. Any stock
dividends or declared but unpaid cash dividends attributable to such shares of
Restricted Stock shall also be forfeited.
6.03 Exception for Termination Due to Death, Disability, Normal
Retirement or following a Change in Control. Notwithstanding the general rule
contained in Section 6.01, Restricted Stock awarded to a Recipient whose
employment with or service on the Board of the Company or an Affiliate
terminates due to death, Disability, Normal Retirement or following a Change in
<PAGE>
Control shall be deemed earned as of the Recipient's last day of employment with
the Company or an Affiliate, or last day of service on the Board of the Company
or an Affiliate; provided that Restricted Stock awarded to a Key Employee who at
any time also serves as a Director, shall not be deemed earned until both
employment and service as a Director have been terminated.
6.04 Revocation for Cause. Notwithstanding anything hereinafter to the
contrary, the Board may by resolution immediately revoke, rescind and terminate
any Award, or portion thereof, previously awarded under the Plan, to the extent
Restricted Stock has not been redelivered by the Escrow Agent to the Recipient,
whether or not yet earned, in the case of a Key Employee whose employment is
terminated by the Company or an Affiliate or an Outside Director whose service
is terminated by the Company or an Affiliate for Cause or who is discovered
after
B-5
<PAGE>
termination of employment or service on the Board to have engaged in conduct
that would have justified termination for Cause.
6.05 Restricted Stock Legend. Each certificate in respect of shares of
Restricted Stock awarded under the Plan shall be registered in the name of the
Recipient and deposited by the Recipient, together with a stock power endorsed
in blank, with the Escrow Agent and shall bear the following (or a similar)
legend:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the terms
and conditions (including forfeiture) contained in the Oneida
Financial Corp. 2000 Recognition and Retention Plan. Copies of
such Plan are on file in the offices of the Secretary of
Oneida Financial Corp., 182 Main Street, Oneida, New York
13421."
6.06 Payment of Dividends and Return of Capital. After an Award has
been granted but before such Award has been earned, the Recipient shall receive
any cash dividends paid with respect to such shares, or shall share in any
pro-rata return of capital to all shareholders with respect to the Common Stock.
Stock dividends declared by the Company and paid on Awards that have not yet
been earned shall be subject to the same restrictions as the Restricted Stock
and the certificate(s) or other instruments representing or evidencing such
shares shall be legended in the manner provided in Section 6.05 and shall be
delivered to the Escrow Agent for distribution to the Recipient when the
Restricted Stock upon which such dividends were paid are earned. Unless the
Recipient has made an election under Section 83(b) of the Code, cash dividends
or other amounts so paid on shares that have not yet been earned by the
Recipient shall be treated as compensation income to the Recipient when paid. If
dividends are paid with respect to shares of Restricted Stock under the Plan
that have been forfeited and returned to the Bank or to a trust established to
hold issued and unawarded or forfeited shares, the Committee can determine to
award such dividends to any Recipient or Recipients under the Plan, to any other
employee or director of the Company or the Bank, or can return such dividends to
the Company.
6.07 Voting of Restricted Shares. After an Award has been granted, the
Recipient as conditional owner of the Restricted Stock shall have the right to
vote such shares.
6.08 Delivery of Earned Shares. At the expiration of the restrictions
imposed by Section 6.01, the Escrow Agent shall redeliver to the Recipient (or
where the relevant provision of Section 6.02 applies in the case of a deceased
Recipient, to his Beneficiary) the certificate(s) and any remaining stock power
deposited with it pursuant to Section 5.03 and the shares represented by such
certificate(s) shall be free of the restrictions referred to Section 6.01.
7. Adjustments upon Changes in Capitalization
In the event of any change in the outstanding shares subsequent to the
Effective Date by reason of any reorganization, recapitalization, stock split,
stock dividend, combination or exchange of shares, or any merger, consolidation
or any change in the corporate structure or shares of the Company without
<PAGE>
receipt or payment of consideration by the Company, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive. Any shares of stock or other securities received, as a result of any
of the foregoing, by a Recipient with respect to Restricted Stock shall be
subject to the same restrictions and the certificate(s) or other instruments
representing or evidencing such shares or securities shall be legended and
deposited with the Escrow Agent in the manner provided in Section 6.05.
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<PAGE>
8. Assignments and Transfers
No Award nor any right or interest of a Recipient under the Plan in any
instrument evidencing any Award under the Plan may be assigned, encumbered or
transferred (within the meaning of Code Section 83) except, in the event of the
death of a Recipient, by will or the laws of descent and distribution until such
Award is earned.
9. Key Employee Rights under the Plan
No Key Employee shall have a right to be selected as a Recipient nor,
having been so selected, to be selected again as a Recipient and no Key Employee
or other person shall have any claim or right to be granted an Award under the
Plan or under any other incentive or similar plan of the Company or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any Key Employee any right to be retained in the employ of the Bank or
any Affiliate.
10. Outside Director Rights under the Plan
Neither the Plan nor any action taken thereunder shall be construed as
giving any Outside Director any right to be retained in the service of the
Company or any Affiliate.
11. Withholding Tax
Upon the termination of the Restricted Period with respect to any
shares of Restricted Stock (or at any such earlier time that an election is made
by the Recipient under Section 83(b) of the Code, or any successor provision
thereto, to include the value of such shares in taxable income), the Bank or the
Company shall have the right to require the Recipient or other person receiving
such shares to pay the Bank or the Company the amount of any taxes that the Bank
or the Company is required to withhold with respect to such shares, or, in lieu
thereof, to retain or sell, with or without notice, a sufficient number of
shares held by it to cover the amount required to be withheld. The Bank or the
Company shall have the right to deduct from all dividends paid with respect to
shares of Restricted Stock the amount of any taxes which the Bank or the Company
is required to withhold with respect to such dividend payments.
12. Amendment or Termination
The Board of the Company may amend, suspend or terminate the Plan or
any portion thereof at any time, provided, however, that no such amendment,
suspension or termination shall impair the rights of any Recipient, without his
consent, in any Award theretofore made pursuant to the Plan. Any amendment or
modification of the Plan or an outstanding Award under the Plan, including but
not limited to the acceleration of vesting of an outstanding Award for reasons
other than death, Disability, Normal Retirement or termination following a
Change in Control, shall be approved by the Committee or the full Board of the
Company.
13. Governing Law
The Plan shall be governed by the laws of the State of Delaware.
<PAGE>
14. Term of Plan
The Plan shall become effective on the date of, or a date determined by
the Board of Directors following, approval of the Plan by the Company's
stockholders. It shall continue in effect until the earlier of (i) ten years
from the Effective Date unless sooner terminated under Section 12 hereof, or
(ii) the date on which all shares of Common Stock available for award hereunder
have vested in the Recipients of such Awards.
B-7
<PAGE>
IN WITNESS WHEREOF, the Company has caused the Plan to be executed by
its duly authorized officers and the corporate seal to be affixed and duly
attested, as of the ____ day of _________, 2000.
Date Approved by Shareholders: __________
Effective Date: __________
ATTEST: ONEIDA FINANCIAL CORP.
___________________ _______________________
Secretary Executive Officer
B-8
<PAGE>
REVOCABLE PROXY
Oneida Financial Corp.
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
April 25, 2000
The undersigned hereby appoints the official proxy committee consisting of the
Board of Directors with full powers of substitution to act as attorneys and
proxies for the undersigned to vote all shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
("Annual Meeting") to be held at the Greater Oneida Civic Center, 159 Main
Street, Oneida, New York on April 25, 2000, at 4:00 p.m., Eastern Time. The
official proxy committee is authorized to cast all votes to which the
undersigned is entitled as follows:
1. The election as Directors of all nominees listed below each to serve for a
three-year term:
With- For All
For hold Except
[ ] [ ] [ ]
Nicholas J. Christakos
Patricia D. Caprio
and Frank O. White, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
For Against Abstain
[ ] [ ] [ ]
2. The approval of Oneida Financial Corp. 2000 Stock Option Plan.
For Against Abstain
[ ] [ ] [ ]
3. The approval of Oneida Financial Corp. 2000 Recognition and Retention Plan.
For Against Abstain
[ ] [ ] [ ]
4. The ratification of PricewaterhouseCoopers, LLP as the Company's independent
auditor for the fiscal year ended December 31, 2000.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING. [ ]
The Board of Directors recommends a vote "FOR" each of the listed proposals.
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE, IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED AS
DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
Please be sure to sign and date this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Oneida Financial Corp.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Should the above signed be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the shareholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Shareholders, or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
The above signed acknowledges receipt from the Company prior to the execution of
this proxy of Notice of the Annual Meeting, a proxy statement dated March 23,
2000, and audited financial statements. Please sign exactly as your name appears
on this card. When signing as attorney, executor, administrator, trustee or
guardian, please give full title.
PLEASE COMPLETE AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
