SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Peekskill Financial Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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5) Total fee paid:
[_] Fee paid previously with preliminary materials:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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4) Date Filed:
(SC14A-07/98)
[PEEKSKILL FINANCIAL CORPORATION LETTERHEAD]
September 22, 1998
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Peekskill Financial
Corporation (the "Company"), we cordially invite you to attend the Company's
Annual Meeting of Stockholders. The meeting will be held at 3:30 p.m.,
Peekskill, New York time, on October 21, 1998 at the Main office of the Company
located at 1019 Park Street, Peekskill, New York 10566.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the election of two directors of the Company, to approve certain
amendments to the Peekskill Financial Corporation 1996 Stock Option and
Incentive Plan, to approve certain amendments to the Peekskill Financial
Corporation 1996 Recognition and Retention Plan and the ratification of the
appointment of KPMG Peat Marwick LLP as auditors of the Company for the fiscal
year ending June 30, 1999. The Board has carefully considered these proposals
and unanimously recommends that you vote "For" the proposals.
We encourage you to attend the meeting in person. Whether or not you plan
to attend, please read the enclosed Proxy Statement and then complete, sign and
date the enclosed proxy card and return it in the accompanying postage prepaid
return envelope as promptly as possible. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented
at the meeting.
Sincerely,
Eldorus Maynard
Chairman of the Board and
Chief Executive Officer
Peekskill Financial Corporation
1019 Park Street
Peekskill, New York 10566
(914) 737-2777
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 21, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Peekskill Financial Corporation (the "Company") will be held at
the Main office of the Company located at 1019 Park Street, Peekskill, New York
10566, at 3:30 p.m., Peekskill, New York time, on October 21, 1998.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The approval of the amendment and restatement of the Peekskill
Financial Corporation 1996 Stock Option and Incentive Plan to provide
for the acceleration of the vesting of the awards in the event of a
change in control;
3. The approval of the amendment and restatement of the Peekskill
Financial Corporation 1996 Recognition and Retention Plan to provide
for the acceleration of the vesting of the awards in the event of a
change in control;
4. The ratification of the appointment of KPMG Peat Marwick LLP as
auditors of the Company for the fiscal year ending June 30, 1999; and
such other matters as may properly come before the Meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
September 10, 1998 are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
You are requested to complete and sign the enclosed form of proxy, which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Eldorus Maynard
Chairman of the Board and
Chief Executive Officer
Peekskill, New York
September 22, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
Peekskill Financial Corporation
1019 Park Street
Peekskill, New York 10566
(914) 737-2777
ANNUAL MEETING OF STOCKHOLDERS
October 21, 1998
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Peekskill Financial Corporation (the
"Company"), the parent company of First Federal Savings Bank ("First Federal" or
the "Bank"), of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting") which will be held at the main office of the Company
located at 1019 Park Street, Peekskill, New York 10566 on October 21, 1998, at
3:30 p.m., Peekskill, New York time, and all adjournments or postponements of
the Meeting. The accompanying Notice of Annual Meeting and this Proxy Statement
are first being mailed to stockholders on or about September 22, 1998. Certain
of the information provided herein relates to First Federal, a wholly owned
subsidiary and the predecessor of the Company.
At the Meeting, stockholders of the Company are being asked to consider and
vote upon the election of two directors of the Company, the approval of the
adoption of the amended and restated Peekskill Financial Corporation 1996 Stock
Option and Incentive Plan, the approval of the adoption of the amended and
restated Peekskill Financial Corporation 1996 Recognition and Retention Plan and
the ratification of the appointment of KPMG Peat Marwick LLP as auditors of the
Company for the fiscal year ending June 30, 1999.
Vote Required and Proxy Information
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the proposals set forth
in this Proxy Statement. The Company does not know of any matters, other than
those described in the Notice of Annual Meeting, that are to come before the
Meeting. If any other matters are properly presented at the Meeting for action,
the persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in person or
represented by proxy at the Meeting and entitled to vote on the election of
directors. The proposals to approve the adoption of the amended and restated
Peekskill Financial Corporation 1996 Stock Option and Incentive Plan and the
adoption of the amended and restated Peekskill Financial Corporation 1996
Recognition and Retention Plan each requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock present in person or
represented by proxy at the meeting and entitled to vote on each matter.
Approval of the ratification of the appointment of KPMG Peat Marwick LLP also
requires the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or represented by proxy at the meeting
and entitled to vote on the matter. Proxies marked to abstain with respect to a
proposal have the same effect as votes against the proposal. Broker non-votes
have no effect on the vote. A majority of the shares of the Common Stock,
present in person or represented by proxy, shall constitute a quorum for
purposes of the Meeting. Abstentions and broker non-votes are counted for
purposes of determining a quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to William
LaCalamito, Corporate Secretary, Peekskill Financial Corporation, 1019 Park
Street, Peekskill, New York 10566.
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on September 10, 1998
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 2,862,569 shares of Common Stock issued and
outstanding.
The following table sets forth information regarding share ownership of (i)
those persons or entities known by management to beneficially own more than five
percent of the Common Stock, (ii) each member of the Company's board of
directors, (iii) each officer of the Company and the Bank who made in excess of
$100,000 (salary and bonus) during the fiscal period ended June 30, 1998 (the
"Named Officers"); and (iv) all directors and executive officers of the Company
and the Bank as a group.
Shares Beneficially
Owned at Percent
Beneficial Owner September 10, 1998 of Class
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Principal Owners
Peekskill Financial Corporation Employee Stock Ownership Plan(1) 286,982 10.0%
1019 Park Street
Peekskill, New York 10566
Brandes Investment Partners, L.P.(2) 275,410 9.6%
12750 High Bluff Drive, Suite 420
San Diego, California 92130
Gould Investors L.P. 259,000 9.0%
GIT Pension Trust
BRT Pension Trust
REIT Management Corp. Pension Trust
REIT Management Corp. Profit Sharing Trust
60 Cutter Mill Road, Suite 303
Great Neck, New York 11021(3)
First Manhattan Co.(4) 185,615 6.5%
437 Madison Avenue
New York, New York 10022
Wellington Management Company, LLP(5) 160,000 5.6%
75 State Street
Boston, Massachusetts 02109
Directors and Named Officers(6)
Eldorus Maynard, Chairman of the Board and 71,995 2.5%
Chief Executive Officer
William LaCalamito, President, 72,140 2.5%
Chief Operating Officer and Director
Dominick Bertoline, Director 22,816 .8%
Edward H. Dwyer, Director 38,726 1.3%
Robert E. Flower, Director 33,980 1.2%
John A. McGurty, Jr., M.D. 5,000 .2%
Directors and executive officers of the Company and the Bank, 254,003 8.5%
as a group (8 persons)(7)
2
(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), 40,998 of which have been allocated to accounts of
participants and are therefore excluded from the total. First Bankers
Trust, Quincy, Illinois, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to accounts of participants. Participants in the ESOP are entitled to
instruct the trustee as to the voting of shares allocated to their accounts
under the ESOP. Unallocated shares held in the ESOP's suspense account or
allocated shares for which no voting instructions are received are voted by
the trustee in the same proportion as allocated shares voted by
participants.
(2) As reported on Schedule 13G dated February 10, 1998 filed by Brandes
Investment Partners, L.P. ("Brandes") in which Brandes reported sole voting
power and dispositive power over 275,410 shares.
(3) As reported on Schedule 13D dated June 5, 1998 in which Gould Investors
L.P. reported sole voting and sole dispositive power over 249,000 shares,
GIT Pension Trust reported sole voting and dispositive power over 2,500
shares, BRT Pension Trust reported sole voting and dispositive power over
2,500 shares, REIT Management Corp. Pension Trust reported sole voting and
dispositive power over 2,500 shares and REIT Management Corp. Profit
Sharing Trust reported sole voting and dispositive power over 2,500 shares.
(4) As reported on Schedule 13G dated February 9, 1998 filed by First Manhattan
Co. ("First Manhattan") in which First Manhattan reported sole voting and
dispositive power in regards to 135,514 shares, shared voting power in
regards to 22,601 shares and shared dispositive power in regards to 50,101
shares.
(5) As reported on Schedule 13G dated January 14, 1998 filed by Wellington
Management Company, LLP ("Wellington") in which Wellington reported shared
voting and dispositive power over 160,000 shares.
(6) The address of each Director and Named Officer is the same as that of the
Company.
(7) Amount includes shares held directly, as well as shares allocated to such
individuals under the ESOP, shares held jointly with family members, shares
held in retirement accounts, shares held in a fiduciary capacity or by
certain family members, with respect to which shares the group members may
be deemed to have sole voting and/or investment power. The amounts reported
include 106,596 shares awarded to such individuals pursuant to the stock
option plan which shares are exercisable within 60 days of September 10,
1998 and exclude 159,889 shares awarded to such individuals pursuant to the
Stock Option Plan which shares are not exercisable within 60 days of
September 10, 1998. In addition, the amounts include 10,250, 10,250 and
3,280 vested shares which have been awarded to Chairman Maynard, President
LaCalamito and each outside director, except Director McGurty,
respectively, pursuant to the Company's Recognition and Retention Plan
("RRP").
The following table sets forth the beneficial ownership of the Directors
and Named Officers on page 2 using the same assumptions as the table set forth
on page 2 except that the amounts include unvested shares issued under the RRP.
Percent
Beneficial Owner September 10, 1998 of Class
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Directors and Named Officers
Eldorus Maynard, Chairman of the Board and 102,742 3.5%
Chief Executive Officer
William LaCalamito, President,
Chief Operating Officer and Director 102,887 3.5
Dominick Bertoline, Director 27,735 1.0
Edward H. Dwyer, Director 43,645 1.5
Robert E. Flower, Director 38,899 1.4
John A. McGurty, Jr., M.D 5,000 .2
Directors and executive officers of the Company and
the Bank, as a group (8 persons) 334,254 11.2
3
PROPOSAL I. ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of six members, each of
whom is also a director of the Bank. The Board is divided into three classes,
each of which contains approximately one-third of the Board, and approximately
one-third of the directors are elected annually. Directors of the Company are
generally elected to serve for a three-year term or until their respective
successors are elected and qualified.
The following table sets forth certain information, as of September 10,
1998, regarding the Company's Board of Directors, including each director's term
of office. The Board of Directors acting as the nominating committee has
recommended and approved the nominees identified in the following table. 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 Meeting FOR the election of the nominees identified below. If a
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute nominee as the Board of Directors may
recommend. At this time, the Board of Directors knows of no reason why the
nominees may be unable to serve, if elected. There are no arrangements or
understandings between any director or nominee and any other person pursuant to
which such director or nominee was selected.
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
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NOMINEES
Eldorus Maynard 63 Chairman of the Board 1993 2001 71,995(3) 2.5%
and Chief Executive
Officer
Robert E. Flower 61 Director 1987 2001 33,980 1.2
DIRECTORS CONTINUING IN OFFICE
Edward H. Dwyer 72 Director 1973 1999 38,726 1.3
John A. McGurty, Jr., M.D. 45 Director 1998 1999 5,000 .2
William J. LaCalamito 39 President, Chief 1995 2000 72,140(3) 2.5
Operating Officer and
Director
Dominick Bertoline 52 Director 1986 2000 22,816 .8
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(1) Includes service as a director of the Bank prior to the formation of the
Company.
(2) Includes shares held directly, in retirement accounts, in a fiduciary
capacity or by certain affiliated entities or members of the named
individuals' families, with respect to which shares the named individuals
may be deemed to have sole or shared voting and/or dispositive powers. Also
includes 10,250, 10,250 and 3,280 vested shares granted to Chairman
Maynard, President LaCalamito and each outside director, except Director
McGurty, respectively, pursuant to the RRP and 40,998, 40,998 and 8,200
shares subject to option awarded pursuant to the stock option plan which
are exercisable within 60 days of September 10, 1998.
(3) Includes 6,332 and 6,101 shares allocated to Chairman Maynard and President
LaCalamito, respectively, pursuant to the ESOP.
The business experience of each nominee and Director for at least the past
five years is set forth below.
Eldorus Maynard is Chairman of the Board and Chief Executive Officer of the
Bank. Mr. Maynard first joined the Bank as a teller and bookkeeper in 1958. Mr.
Maynard served as Secretary of the Bank beginning in 1964, Assistant Vice
President and Secretary beginning in 1977, and Vice President and Secretary
beginning in 1985. Mr. Maynard was named Chairman and Chief Executive Officer in
1995.
4
Robert E. Flower is the owner of Bliss Manufacturing, Inc., a manufacturer
of women's clothing. Mr. Flower has been a member of the Board of Directors
since 1987.
Edward H. Dwyer is the owner of Dwyer Agency, a Real Estate and Insurance
Agency. Mr. Dwyer has been a member of the Board of Directors since 1973.
John A. McGurty, Jr., M.D. is the Director of Emergency Services at the
Hudson Valley Hospital Center, a position he has held since 1996. Dr. McGurty
also maintains a private practice in Peekskill, New York.
William J. LaCalamito is President, Chief Operating Officer, Chief
Financial Officer and Secretary of the Company and the Bank. Mr. LaCalamito
joined the Bank in 1988 as Vice President. In 1993, Mr. LaCalamito was named
Secretary of the Bank and in 1995 he was also named Chief Financial Officer. In
his capacity as President and Chief Operating Officer, Mr. LaCalamito is
responsible for overseeing all the primary business functions of the Bank.
Dominick Bertoline is President and Chief Executive Officer of D. Bertoline
& Sons, Inc., an Anheuser- Busch product distributor. Mr. Bertoline has been a
member of the Board of Directors since 1986.
Meetings and Committees of the Board of Directors
The Company. The Company's Board of Directors has standing Audit and
Compensation Committees which meet and act in conjunction with the like
committees of the Bank's Board of Directors. The Board of Directors met 14 times
in fiscal 1998. During fiscal 1998, no incumbent director of the Company
attended fewer than 75% of the total number of meetings held by the Board of
Directors.
The entire Board of Directors acts as a nominating committee for selecting
nominees for election as directors. While the Board of Directors will consider
nominees recommended by stockholders, the Board has not actively solicited such
nominations. Pursuant to the Company's Bylaws, nominations by stockholders
generally must be delivered in writing to the Secretary of the Company at least
30 days prior to the date of the Meeting. The Board of Directors met once during
fiscal 1998 in its capacity as a nominating committee.
The Bank. The Bank's Board of Directors met 13 times during the fiscal year
ended June 30, 1998. During fiscal 1998, no incumbent director of the Bank
attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of
Directors on which he served.
The Bank has standing Executive, Audit and Compensation Committees.
The Bank's Executive Committee meets on a monthly basis and exercises the
powers of the full Board of Directors between Board meetings. The Executive
Committee is composed of Directors Maynard, Dwyer and Flower. The Executive
Committee met 12 times during the fiscal year ended June 30, 1998.
The Audit Committee is responsible for recommending the selection of the
independent auditors of the Company and the Bank and meeting with the
independent auditors to outline the scope and review the results of the annual
audit. The current members of this committee are Directors Bertoline, Dwyer and
Flower. This committee held one meeting during the fiscal year ended June 30,
1998.
The Bank's Compensation Committee is responsible for the design and
administration of the Bank's overall compensation program. In addition, the
committee reviews and approves all executive officers' compensation plans,
evaluates executive performance, and considers other related matters. The
current members of this committee are Directors Bertoline, Dwyer and Flower. The
Compensation Committee held two meetings during the fiscal year ended June 30,
1998.
5
Director Compensation
Each director on the Board of Directors of the Company is paid a fee of
$500 for each Board meeting attended. Each director on the Board of Directors is
also paid a fee of $500 for each regular meeting of the Bank's Board attended.
Executive Committee Members also receive $150 per month for attendance at
Executive Committee Meetings.
Executive Compensation
The Company has not paid any compensation to its executive officers since
its formation. The Company does not presently anticipate paying any compensation
to such persons until it becomes actively involved in the operation or
acquisition of businesses other than the Bank.
The following table sets forth information concerning the compensation paid
to the Named Officers for services in all capacities to the Company for the
fiscal year ended June 30, 1998.
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Summary Compensation Table
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Long-Term
Annual Compensation Compensation
Awards
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Options/
Stock
Restricted Appreciation
Other Annual Stock Rights All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($)(1) Award($) ("SARs")(#) Compensation($)(4)
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Eldorus Maynard, Chairman of 1998 $134,800(5) $9,308 $--- $ --- --- $68,011
the Board and Chief Executive 1997 134,800(5) 9,308 --- 486,839(2) 102,494(3) 58,126
Officer 1996 126,175(5) 9,308 --- --- --- 39,573
-
William LaCalamito, 1998 $129,500(5) $9,038 $--- $ --- --- $58,173
President and Chief 1997 129,500(5) 9,038 --- 486,839(2) 102,494(3) 46,983
Operating Officer 1996 118,500(5) 9,038 --- --- --- 27,099
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(1) Neither Mr. Maynard nor Mr. LaCalamito received additional benefits or
perquisites which, in the aggregate, exceeded 10% of their salary and
bonus.
(2) Amount reflects dollar value of award of 40,997 shares of restricted stock
granted to Messrs. Maynard and LaCalamito each pursuant to the RRP on July
3, 1996. The dollar value per share of such award on the date of grant was
$11.875.
(3) On July 3, 1996, pursuant to the 1996 Stock Option and Incentive Plan, the
Company granted to Mr. Maynard and Mr. LaCalamito options to purchase
102,494 shares of common stock each at an exercise price equal to the
market value per share on the date of the grant.
(4) Amounts include contributions by the Company on behalf of the employee to
the ESOP, 401(k) Plan and SERA as follows:
ESOP 401(k) Plan SERA
-------------------------------- -------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Eldorus Maynard $45,134 $36,900 $15,921 $--- $--- $3,338 $22,877 $21,226 $20,314
William LaCalamito 43,436 35,475 15,428 --- --- 3,225 14,737 11,508 8,446
(5) Amounts include directors fees paid to Mr. Maynard of $13,800, $13,800 and
$10,050, respectively, for fiscal years 1998, 1997 and 1996 and $12,000,
$12,000 and $6,000 paid to Mr. LaCalamito for fiscal years 1998, 1997 and
1996, respectively.
6
The following table sets forth certain information concerning the number
and value of stock options at June 30, 1998 held by the Named Officers, none of
which have been exercised.
==============================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#)(1) FY-End ($)(2)
----------------------------------------------------------
Shares Acquired
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------- ----------- ------------- ----------- -------------
Eldorus Maynard N/A N/A 40,998 61,496 $251,113 $376,663
William LaCalamito N/A N/A 40,998 61,496 251,113 376,663
==============================================================================================================================
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(1) Represents options to purchase Common Stock awarded to Messrs. Maynard and
LaCalamito, respectively. The options vest in five equal annual
installments. The first installment vested on July 3, 1997, the second
installment vested on July 3, 1998, with the remaining installments to vest
equally on July 3, 1999, 2000 and 2001.
(2) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the option granted based upon the average of
the closing bid and ask price of $18.00 per share of Common Stock as
reported on the NASDAQ National Market system on June 30, 1998.
Employment Agreements
The Company has entered into employment agreements with Eldorus Maynard and
William LaCalamito. The agreements have initial terms of three years and provide
for daily extensions, subject to a performance evaluation by disinterested
members of the Board of Directors of the Company. The employment agreements
require the payment of the employee's annual salaries, bonuses and benefits from
the Company and the Bank for the remaining term of the contract unless the
employee dies, voluntarily resigns or is terminated for cause.
The employment agreements provide for payment to the employee (in addition
to, if applicable, his salary, bonus and benefits for the remainder of the term
of the contract) of an amount equal to 299% of the employee's compensation in
the event that his employment terminates (whether voluntarily or otherwise) in
connection with a "change in control" of the Bank or the Company or within
eighteen months thereafter. For the purposes of the employment agreements, a
"change in control" is defined to include, among other things, any event which
would require the filing of an application for acquisition of control or notice
of change in control pursuant to 12 C.F.R. ss. 574.3 or 4. Such events are
generally triggered upon the acquisition or control of 10% of the Company's
common stock. Based on their current salaries, if the employment of Messrs.
Maynard and LaCalamito had been involuntarily terminated as of June 30, 1998
under circumstances entitling them to severance pay as described above, they
would have been entitled to receive cash payments of up to $1.31 million and
$1.25 million, respectively, depending on the remaining term of the agreements.
Supplemental Executive Retirement Agreements. The Bank has entered into a
non-qualified Supplemental Executive Retirement Agreement (a "SERA") with
Chairman and Chief Executive Officer Maynard to provide him with a supplemental
retirement benefit equal to what would have been provided to him under the
Retirement Income Plan but for the limitations contained in Sections 401, 414
and 415 of the Internal Revenue Code of 1986, as amended. In addition, the Bank
has entered into a SERA with President LaCalamito. Under this SERA, the Bank
will provide for payment of a monthly supplemental retirement benefit equal to
up to 24% of his average monthly compensation during the three highest 12-month
periods prior to retirement. Such benefit shall be payable upon normal
retirement at age 65 or, under certain circumstances, age 55 if his termination
is without cause. Upon the employee's death, 50% of the amount payable under the
Agreement shall be payable to his spouse until her death.
7
The Bank plans to establish an irrevocable grantor trust in connection with
the SERAs. This trust will be funded with contributions from the Bank for the
purpose of providing the benefits promised under the terms of the SERAs. Under
such circumstances, the SERA participants will have only the rights of unsecured
creditors with respect to the trust's assets, and do not recognize income with
respect to benefits provided by the SERA until such benefits are received by the
participants. The assets of the grantor trust will be considered part of the
general assets of the Bank and will be subject to the claims of the Bank's
creditors in the event of the Bank's insolvency. Earnings on the trust's assets
will be taxable to the Bank. The trustee of the trust may invest the trust's
assets in the Company's stock.
The Agreements described above are unfunded and all obligations arising
thereunder are payable from the general assets of the Bank.
Benefit Plans
General. The Bank currently provides insurance benefits to its employees,
including health, life, dental, short and long term disability and major
medical, subject to certain deductibles and copayments by employees.
Savings and Investment Plan. The Bank maintains a Savings and Investment
Plan for the benefit of its employees (the "401(k) Plan"). The Plan and its
related Trust comply with the applicable provisions of Sections 401(a), 401(k)
and 501(a) of the Internal Revenue Code of 1986. An employee is eligible to
participate in the Plan after completing three months of service.
Participants are permitted to make salary reduction contributions to the
401(k) Plan of between 2% and 16% of the participant's annual salary. Each
participant's salary reduction contribution is matched by the Bank in an amount
equal to 100% of the participant's salary reduction contribution up to a maximum
of 6% of the participant's compensation for the payroll period.
The Bank's contributions to the 401(k) plan on behalf of an employee vest
to that employee in the amount of 20% for each succeeding year up to five years,
after which the employee is fully vested. Participants' contributions to the
401(k) Plan are fully and immediately vested. Withdrawals are not permitted
before age 59 and six months except in the event of death, disability,
termination of employment or reasons of proven financial hardship. Upon
termination of employment, the participant's account will be distributed, unless
he or she elects to defer the payment.
The funds included in the 401(k) Plan are invested at the direction of the
participant into one of the investment options available under the 401(k) Plan.
Changes in investment directions among the funds are permitted on a quarterly
basis pursuant to procedures established by the Plan Administrator. Each
participant receives a quarterly statement which provides information regarding,
among other things, the market value of his investments and contributions made
to the 401(k) Plan on his behalf. Upon the implementation of the Company's ESOP,
the 401(k) Plan was frozen and all contributions to the Plan ceased. Management
is considering reactivation of the 401(k) Plan, however, without matching
contributions.
Retirement Income Plan. The Bank sponsors a Retirement Income Plan for its
employees (the "Retirement Plan"). This non-contributory defined benefit
retirement plan covers all employees who have completed one year and 1,000 hours
of service and have attained age 18.
The Retirement Plan is funded solely by contributions made by the Bank. The
Bank's contribution to the Pension Plan for the plan year ended December 31,
1997 was $84,040. Employees become fully vested after 5 years of service or
after attaining age 65.
A participant may receive upon normal retirement either a lump sum payment
or a level monthly benefit payment. The normal retirement age is 65 and the
early retirement age is under most circumstances after age 55. Employees who
terminate employment after becoming vested will be eligible to receive a pension
benefit.
8
Normal retirement benefits are equal to 50% of: (i) average earnings (not
to exceed $150,000 adjusted annually for the cost of living) for any three
consecutive calendar years during the ten years prior to termination,
retirement, or death multiplied by (ii) the ratio of number of years credited
service (up to a maximum of 15 years) to 15 or (iii) the ratio which the number
of years of credited service bears to the greater of 15 years or the number of
years of credited service an employee would have had at normal retirement date
had his service not ceased.
The following table illustrates annual pension benefits payable upon normal
retirement, which are not subject to offset for Social Security payments, based
on various levels of compensation and years of service and assuming payment in
the form of a straight-line annuity.
Average Annual Years of Service
Compensation 10 15 20 25 30 35 40
- ------------------------- ------- ------------------------------ ------------------------------
$ 40,000................ $13,333 20,000 20,000 20,000 20,000 20,000 20,000
60,000................ 20,000 30,000 30,000 30,000 30,000 30,000 30,000
80,000................ 26,667 40,000 40,000 40,000 40,000 40,000 40,000
100,000................ 33,333 50,000 50,000 50,000 50,000 50,000 50,000
120,000................ 40,000 60,000 60,000 60,000 60,000 60,000 60,000
140,000................ 46,667 70,000 70,000 70,000 70,000 70,000 70,000
160,000................ 53,333 80,000 80,000 80,000 80,000 80,000 80,000
At June 30, 1998, Messrs. Maynard and LaCalamito had 40, and 9 years of
credited service under the Plan, respectively.
Compensation Committee Report on Executive Compensation
Under rules established by the Securities and Exchange Commission ("SEC"),
the Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's Chief Executive Officer and
other executive officers of the Company. The disclosure requirements for the
Chief Executive Officer and other executive officers include the use of tables
and a report explaining the rationale for and considerations that led to
fundamental executive compensation decisions affecting those individuals. In
fulfillment of this requirement, the Compensation Committee of the Bank, at the
direction of the Board of Directors, has prepared the following report for
inclusion in this proxy statement.
General. The Board of Directors of the Bank has delegated to the
Compensation Committee the responsibility and authority to oversee the general
compensation policies of the Bank, to establish compensation plans and specific
compensation levels for executive officers, and to review the recommendations of
management for compensation and benefits for other officers and employees of the
Bank. The Compensation Committee is composed solely of independent outside
directors.
In light of the Conversion of the Bank from a mutually owned to a publicly
owned financial services company, the Compensation Committee developed an
executive compensation policy designed to: (i) offer competitive compensation
packages in order to attract, motivate, retain and reward those key executive
officers who are crucial to the long-term success of the Bank; and (ii)
encourage decision making that maximizes long-term stockholder value. The
Compensation Committee's primary compensation objective is to ensure that such
compensation be tied to the achievement of both short term and longer term
objectives established in conjunction with the Company's annual planning
process.
Executive Compensation Policy. The compensation package provided to the
executive officers of the Bank is composed principally of base salary and annual
incentive bonus awards. Executive officers also participate in other benefit
plans available to all eligible employees including the ESOP. The Compensation
Committee periodically reviews the various elements of the compensation package
available to executive officers in consideration of the policies described
above. The Compensation Committee met two times in fiscal 1998 to review
employee related compensation/benefit issues in general and to review and
recommend the base salary and bonuses of the Chief Executive Officer and the
President.
9
Base Salary. It is the policy of the Compensation Committee to annually
review executive compensation packages, including base salaries paid or proposed
to be paid, with compensation packages and base salaries offered by other
financial institutions with total assets and performance results comparable to
those of the Bank, as well as to compare the complexities of the positions under
consideration with similar jobs in other financial institutions regardless of
asset size. This information is primarily derived from third party sources that
provide compensation data and analysis from publicly held companies in the
Bank's market area. Specific factors considered include the level of
responsibility delegated to a particular officer, the complexity of the job
being evaluated, the position's impact on both short term and long term
corporate objectives, the expertise and skill level of the individual under
consideration, the degree to which the officer has achieved his management
objectives for the plan year, and the officer's overall performance in managing
his area of responsibility. The Compensation Committee's decisions are
discretionary and no quantifiable formula is utilized in the decision making
process.
Benefit Plans. The Compensation Committee's policy with respect to employee
benefit plans is to provide competitive benefits to employees of the Bank,
including executive officers. Additionally, the ESOP will provide employees,
including executive officers, with an additional equity-based incentive to
maximize long-term shareholder value. The Compensation Committee believes that a
competitive employee benefit package is essential to achieving the goals of
attracting and retaining highly qualified employees.
Chief Executive Officer. Total compensation paid to the Chief Executive
Officer for fiscal 1998 (including directors' fees) was $144,108, the same as
fiscal 1997. In determining total compensation paid to the Chief Executive
Officer, the Compensation Committee considered factors relating to the
performance of the Bank including (i) the successful completion of the Bank's
conversion to stock form, (ii) the level of operating profit and (iii) goals
relating to efficiency ratios, fee income, loan volume, asset quality, Community
Reinvestment Act compliance and the Bank's infrastructure.
Dominick Bertoline
Edward Dwyer
Robert E. Flower
10
Comparative Stock Performance Presentation
Set forth below is a line graph comparing the cumulative total return on
the Company's Common Stock to the cumulative total return of the Nasdaq Market
Index and the Media General Savings and Loan Index for each annual period
beginning on December 29, 1995 (the date the Company's Common Stock first
reported on the Nasdaq Stock Market) through June 30, 1998. The presentation
assumes $100 was invested on December 29, 1995.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL]
Peekskill S&L Index NASDAQ Index
--------- --------- ------------
12/29/95 100 100 100
06/30/96 117.5 103.84 112.37
06/30/97 150.0 108.03 135.37
06/30/98 178.8 227.24 179.44
11
Certain Transactions
The Bank follows a policy of granting loans to eligible directors,
officers, employees and members of their immediate families for the financing of
their personal residences and for consumer purposes. Under current policy, all
loans to directors and executive officers are required to be made in the
ordinary course of business and on the same terms, including collateral and
interest rates, as those prevailing at the time for comparable transactions and
do not involve more than the normal risk of collectibility at the time of
origination. At June 30, 1998, the Bank's loans to directors, officers,
employees and members of their immediate families totaled approximately $388,000
or 0.9% of the Company's stockholders' equity. All of these loans were current
at June 30, 1998.
PROPOSAL II - APPROVAL OF THE ADOPTION OF THE AMENDED AND RESTATED
PEEKSKILL FINANCIAL CORPORATION 1996 STOCK OPTION AND INCENTIVE PLAN
The Peekskill Financial Corporation 1996 Stock Option and Incentive
Plan (the "Stock Option Plan") was adopted by the Board of Directors of the
Company and ratified by stockholders on July 3, 1996. Pursuant to regulations of
the Office of Thrift Supervision (the "OTS") applicable to stock option plans
established within one year following the completion of a mutual-to-stock
conversion, the Stock Option Plan contains a provision prohibiting the immediate
vesting of stock options upon the occurrence of a change in control (as defined
in the Stock Option Plan).
OTS ruling positions permit the elimination of the provision of a stock
option plan which prohibits immediate vesting upon a Change in Control, provided
that stockholder approval is obtained more than one year following the
completion of the mutual-to-stock conversion. The Board has noted the rapid pace
of consolidation within the thrift industry. In order to assure that the Stock
Option Plan achieves its purposes of encouraging the recruitment and retention
of those individuals on whom the continued success of the Company most depends,
the Board has amended and restated the Stock Option Plan (the "Amended Stock
Option Plan") to provide for immediate vesting of awards upon the occurrence of
a change in control. The Amended Stock Option Plan does not increase the number
of shares reserved for issuance under the Stock Option Plan, change existing
awards, decrease the price per share at which Options may be granted under the
Stock Option Plan or alter the classes of individuals eligible to participate in
the Amended Stock Option Plan. In the event the Amended Stock Option Plan is not
approved by stockholders at the Annual Meeting, the Amended Stock Option Plan
will not be in effect, but the Stock Option Plan as adopted by stockholders in
1996 will remain in effect. Certain provisions of the Amended Stock Option Plan
are described below. The full text of the Amended Stock Option Plan is set forth
as Appendix A to this Proxy Statement, to which reference is made, and the
summary of the Amended Stock Option Plan provided below is qualified in its
entirety by such reference.
Principal Features of the Amended Stock Option Plan
The Amended Stock Option Plan provides for awards in the form of stock
options and stock appreciation rights ("SAR"s). Each award is made on such terms
and conditions, consistent with the Amended Stock Option Plan and applicable OTS
regulations, as the Compensation Committee determines. Currently, awards made in
1996 under such plan vest at a rate of no more than one-fifth of the initial
award per year, subject to the participant maintaining continuous service since
the date of grant. As permitted by OTS ruling positions, the Amended Stock
Option Plan would provide for immediate vesting of all unvested options upon the
occurrence of a Change in Control.
The Amended Stock Option Plan provides that shares may be either authorized
but unissued shares or reacquired shares held by the Company in its treasury.
Any shares subject to an award which expires or is terminated unexercised will
again be available for issuance under the Amended Stock Option Plan or any other
plan of the Company or its subsidiaries. Generally, no award or any right or
interest therein is assignable or transferable except under certain limited
exceptions set forth in the Amended Stock Option Plan.
The Amended Stock Option Plan is administered by the Compensation Committee
of the Board of Directors of the Company (the "Compensation Committee"), which
is comprised of non-employee directors of the Company. Directors Bertoline,
Dwyer and Flower are the present members of the Compensation Committee. Pursuant
to the terms of the Stock Option Plan, any director, officer or employee of the
Company or its affiliates is eligible to participate in
12
the Stock Option Plan, which currently includes 6 persons. In granting awards
under the Stock Option Plan, the Compensation Committee considers, among other
things, position and years of service, value of the participant's services to
the Company and the Bank and the added responsibilities of such individuals as
employees, directors, and officers of a public company.
Stock Options
The term of stock options do not exceed ten years from the date of grant.
The Compensation Committee may grant 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").
In general, stock options will not be exercisable after the expiration of
their terms. Currently, in the event a participant ceases to maintain continuous
service (as defined in the Amended Stock Option Plan) with the Company or the
Bank for any reason (excluding death, disability and termination for cause), an
exercisable stock option will continue to be exercisable for three months
thereafter but in no event after the expiration date of the option. In the event
of disability of a participant during such service, all options not then
exercisable shall become exercisable in full during the shortest of the
following periods: (A) the two-year period immediately succeeding such cessation
of continuous service; or (B) the period remaining until the expiration date of
such option or right. If a participant to whom an option was granted ceases to
maintain continuous service by reason of death, all options not then exercisable
shall become exercisable in full for the period described above. Following the
death of any participant, the Compensation Committee may, as an alternative
means of settlement of an option, elect to pay to the holder thereof an amount
of cash equal to the amount by which the market value of the shares covered by
the option on the date of exercise exceeds the exercise price. A stock option
will automatically terminate and will no longer be exercisable as of the date a
participant is notified of termination for cause.
The exercise price for the purchase of shares subject to a stock option at
the date of grant may not be less than 100% of the market value of the shares
covered by the option on that date. The exercise price must be paid in full in
cash or shares of Common Stock, or a combination of both.
Amendment and Termination
The Board of Directors of the Company may at any time amend, suspend or
terminate the Amended Stock Option Plan or any portion thereof but may not,
without the prior ratification of the stockholders, make any amendment which
shall (i) increase the aggregate number of securities which may be issued under
the Amended Stock Option Plan (except as specifically set forth under the
Amended Stock Option Plan), (ii) materially increase the benefits accruing to
participants, (iii) materially change the requirements as to eligibility for
participation in the Amended Stock Option Plan or (iv) change the class of
persons eligible to participate in the Amended Stock Option Plan, provided,
however, that no such amendment, suspension or termination shall impair the
rights of any participant, without his consent, in any award made pursuant to
the Amended Stock Option Plan. Unless previously terminated, the Amended Stock
Option Plan shall continue in effect for a term of ten years, after which no
further awards may be granted under the Amended Stock Option Plan.
Adjustments Upon Changes in Capitalization
Stock Option Plan awards granted under the Amended Stock Option Plan will
be adjusted by the Compensation Committee in the event of a reorganization,
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger or other change in corporate structure or the Common Stock of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE PEEKSKILL FINANCIAL CORPORATION 1996
STOCK OPTION AND INCENTIVE PLAN IN ORDER TO PROVIDE FOR IMMEDIATE VESTING OF
UNVESTED OPTIONS UPON THE OCCURRENCE OF A CHANGE IN CONTROL.
13
PROPOSAL III - APPROVAL OF THE ADOPTION OF THE AMENDED AND RESTATED
PEEKSKILL FINANCIAL CORPORATION 1996 RECOGNITION AND RETENTION PLAN
The Peekskill Financial Corporation 1996 Recognition and Retention Plan
(the "RRP") was adopted by the Board of Directors of the Company, and ratified
by stockholders on July 3, 1996. Pursuant to regulations of the Office of Thrift
Supervision (the "OTS") applicable to stock benefit plans established or
implemented within one year following the completion of a mutual-to-stock
conversion, the RRP contains a provision prohibiting accelerated vesting upon
the occurrence of a Change of Control (as defined in the RRP).
OTS ruling positions permit the elimination of the provision of the RRP
which prohibits accelerated vesting upon the occurrence of a Change in Control,
provided that stockholder approval is obtained more than one year following the
completion of the mutual-to-stock conversion. The Board has noted the rapid pace
of consolidation within the thrift industry. In order to assure that the RRP
achieves its purposes of encouraging the recruitment and retention of those
individuals on whom the continued success of the Company most depends, the Board
has amended and restated the RRP (the "Amended RRP") to provide for immediate
vesting of unvested restricted stock awards upon the occurrence of a change in
control. The Amended RRP does not increase the number of shares available for
distribution under the RRP, change the RRP's eligibility requirements, or alter
the types of restricted stock or other existing awards that may be made to
participants in the RRP. In the event the Amended RRP is not approved by
stockholders at the Annual Meeting, the Amended RRP will not be in effect, but
the RRP as adopted by stockholders in 1996 will remain in effect. Certain
provisions of the Amended RRP are described below. The full text of the Amended
RRP is set forth as Appendix B to this Proxy Statement, to which reference is
made, and the summary of the Amended RRP provided below is qualified in its
entirety by such reference.
Principal Features of the Amended RRP
The Amended RRP provides for the award of shares of Common Stock ("RRP
Shares") subject to the restrictions described below. Each award under the RRP
is made on such terms and conditions, consistent with the RRP and applicable OTS
regulations, as the Compensation Committee determines. As permitted by OTS
ruling positions, the proposed Amended RRP would provide for immediate vesting
of all unvested options upon the occurrence of a Change in Control.
The Amended RRP is administered by the Compensation Committee of the Board
of Directors of the Company (the "Compensation Committee"), which is comprised
of non-employee directors of the Company. Directors Bertoline, Dwyer and Flower
are the present members of the Compensation Committee. The Compensation
Committee selects the recipients and terms of awards pursuant to the Amended
RRP. In determining to whom and in what amount to grant awards, the Compensation
Committee considers the positions and responsibilities of eligible individuals,
the value of their services to the Company and the Bank and other factors it
deems relevant. Pursuant to the terms of the Amended RRP, any director, officer
or employee of the Company or its affiliates is eligible to participate in the
Amended RRP, which currently includes 6 persons.
The Amended RRP provides that RRP Shares used to fund awards under the
Amended RRP may be either authorized but unissued shares or reacquired shares
held by the Company in its treasury. Any Amended RRP Shares which are forfeited
are again available for issuance under the Amended RRP or any other plan of the
Company or its subsidiaries.
Subject to compliance with OTS Regulations, award recipients earn (i.e.,
become vested in) awards, over a period of time as determined by the
Compensation Committee, at the time of grant. Currently, awards made in 1996
under such plan vest at a rate of no more than one-fifth of the initial award
per year, subject to the participant maintaining continuous service since the
date of grant. As permitted by OTS ruling positions, the proposed Amended RRP
would provide for immediate vesting of all unvested restricted stock upon the
occurrence of a change in control.
In the event a recipient ceases to maintain continuous service (as defined
in the Amended RRP) with the Company or the Bank by reason of death or
disability, Amended RRP Shares still subject to restrictions will be free of
14
these restrictions and shall not be forfeited. In the event of termination for
any other reason, all shares will be forfeited and returned to the Company.
Pursuant to the Amended RRP, and as permitted by OTS ruling positions, all
shares covered by an outstanding award will also become 100% vested upon the
occurrence of a Change of Control of the Company.
Adjustments Upon Changes in Capitalization
RRP Shares awarded under the Amended RRP will be adjusted by the
Compensation Committee in the event of a reorganization, recapitalization, stock
split, stock dividend, combination or exchange of shares, merger or other change
in corporate structure or the Common Stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE PEEKSKILL FINANCIAL CORPORATION 1996
RECOGNITION AND RETENTION PLAN IN ORDER TO PROVIDE FOR IMMEDIATE VESTING OF
UNVESTED RESTRICTED SHARES UPON THE OCCURRENCE OF A CHANGE IN CONTROL.
PROPOSAL IV - RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick LLP,
independent accountants, to be the Company's auditors for the fiscal year ending
June 30, 1999. Representatives of KPMG Peat Marwick LLP are expected to attend
the Meeting to respond to appropriate questions and to make a statement if they
so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the next annual meeting of stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's office located at 1019 Park
Street, Peekskill, New York 10566 by May 26, 1999. Any such proposal shall be
subject to the requirements of the proxy rules adopted under the Exchange Act.
If a proposal does not meet the above requirements for inclusion in the
Company's proxy materials, but otherwise meets the Company's eligibility
requirements to be presented at the next Annual Meeting of Stockholders, the
persons named in the enclosed form of proxy and acting thereon will have the
discretion to vote on any such proposal in accordance with their best judgment
if the proposal is received at the Company's main office no later than August 9,
1999.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
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, directors, officers and
regular employees of the Company and/or the Bank may solicit proxies personally
or by telegraph or telephone without additional compensation.
Peekskill, New York
September 22, 1998
15
Exhibit A
PEEKSKILL FINANCIAL CORPORATION
AMENDED AND RESTATED 1996 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors, directors emeriti,
officers and employees of the Corporation and its Affiliates. It is intended
that designated Options granted pursuant to the provi sions of this Plan to
persons employed by the Corporation or its Affiliates will qualify as Incentive
Stock Options. Options granted to persons who are not employees will be
Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary corporation" of
the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" - means the grant of an Incentive Stock Option, a Non-Qualified
Stock Option, a Stock Appreciation Right, a Limited Stock Appreciation Right or
any combination thereof, as provided in the Plan.
"Bank" - means First Federal Savings Bank and any successor entity.
"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.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or termination
of service as a director, advisory director, director emeritus, officer or
employee of the Corporation or an Affiliate, except that when used with respect
to any Options or Rights which at the time of exercise are intended to be
Incentive Stock Options, continuous service means the absence of any
interruption or termination of service as an employee of the Corporation or an
Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Corporation
or in the case of transfers between payroll locations of the Corporation or
between the Corporation, its parent, its subsidiaries or its successor. With
respect to any advisory director or director emeritus, continuous service shall
mean availability to perform such functions as may be required of such persons.
"Corporation" - means Peekskill Financial Corporation, a Delaware
corporation.
"Disinterested Person" - means any member of the Board of Directors of the
Corporation who (A) is an outside director as defined under Section 162 (m) of
the Code and the regulations thereunder and (B) a person who within the prior
year has not been, and is not being, granted any awards related to the Shares
under this Plan or any other plan of the Corporation or any of its Affiliates
except for awards which (i) are calculated in accordance with a formula as
contemplated in paragraph (c)(2)(ii) of Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934; (ii) result from participation in an ongoing
securities acquisition plan meeting the conditions of paragraph (d)(2) of Rule
16b-3; or (iii) arise from an election by a director to receive all or part of
his board fees in securities. No recipient of a stock award granted pursuant to
Section 19 hereof shall be deemed not to be a Disinterested Person solely by
reason of such grant.
"Employee" - means any person, including an officer or director, who is
employed by the Corporation or any Affiliate.
A-1
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Exercise Price" - means (i) in the case of an Option, the price per Share
at which the Shares subject to such Option may be purchased upon exercise of
such Option and (ii) in the case of a Right, the price per Share (other than the
Market Value per Share on the date of exercise and the Offer Price per Share as
defined in Section 10 hereof) which, upon grant, the Committee determines shall
be utilized in calculating the aggregate value which a Participant shall be
entitled to receive pursuant to Sections 9, 10 or 12 hereof upon exercise of
such Right.
"Incentive Stock Option" - means an option to purchase Shares granted by
the Committee pursuant to Section 6 hereof which is subject to the limitations
and restrictions of Section 8 hereof and is intended to qualify under Section
422(b) of the Code.
"Limited Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Sections 6 and 10 hereof.
"Market Value" - means the average of the high and low quoted sales price
on the date in question (or, if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the NASDAQ System, or any similar system then
in use, or, if no such quotations are available, the fair market value on such
date of a Share as the Committee shall determine.
"Non-Qualified Stock Option" - means an option to purchase Shares granted
by the Committee pursuant to Section 6 hereof, which option is not intended to
qualify under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock Option.
"Participant" - means any director, advisory director, director emeritus,
officer or employee of the Corporation or any Affiliate who is selected by the
Committee to receive an Award or who is granted an Award pursuant to Section 19
hereof.
"Plan" - means the 1996 Stock Option and Incentive Plan of the Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted in
connection with, and to the extent exercis able, in whole or in part, in lieu
of, an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof has been granted.
"Right" - means a Limited Stock Appreciation Right or a Stock Appreciation
Right.
"Shares" - means the shares of common stock of the Corporation.
"Senior Officer" - means the Corporation's president, principal financial
officer or principal accounting officer, any vice president of the Corporation
in charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Corporation. Officers of the Corporation's Affiliates shall be deemed Senior
Officers of the Corporation if they perform such policy-making functions for the
Corporation.
"Stock Appreciation Right" - means a stock appreciation right with respect
to Shares granted by the Committee pursuant to Sections 6 and 9 hereof.
"Ten Percent Beneficial Owner" - means the beneficial owner of more than
ten percent of any class of the Corporation's equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
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3. Administration. The Plan shall be administered by a Committee consisting
of two or more members, each of whom shall be a Disinterested Person. The
members of the Committee shall be appointed by the Board of Directors of the
Corporation. Except as limited by the express provisions of the Plan, the
Committee shall have sole and complete authority and discretion, subject to
Office of Thrift Supervision Regulations, to (i) select Participants and grant
Awards; (ii) determine the number of Shares to be subject to types of Awards
generally, as well as to individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under the
Plan; (iv) prescribe the form and terms of instruments evidencing such grants;
and (v) establish from time to time regulations for the administration of the
Plan, interpret the Plan, and make all determinations deemed necessary or
advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
4. Participation in Committee Awards. The Committee may select from time to
time Participants in the Plan from those directors (including advisory directors
and directors emeriti), officers and employees (other than Disinterested
Persons), of the Corporation or its Affiliates who, in the opinion of the
Committee, have the capacity for contributing to the successful performance of
the Corporation or its Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 10% of the total Shares issued in the Bank's
conversion to the capital stock form. The Shares with respect to which Awards
may be made under the Plan may be either authorized and unissued shares or
issued shares heretofore or hereafter reacquired and held as treasury shares.
Shares which are subject to Related Rights and Related Options shall be counted
only once in determining whether the maximum number of Shares with respect to
which Awards may be granted under the Plan has been exceeded. An Award shall not
be considered to have been made under the Plan with respect to any Option or
Right which terminates and new Awards may be granted under the Plan with respect
to the number of Shares as to which such termination has occurred. Any award
made pursuant to this Plan, which Award is subject to the requirements of Office
of Thrift Supervision Regulations, shall vest in five equal annual installments
with the first installment vesting on the one-year anniversary of the date of
grant, except in the event of death, disability or a change in control of the
Corporation as provided for in Section 13.
In the event Office of Thrift Supervision Regulations are amended (the
"Amended Regulations") to permit shorter vesting periods, any Award made
pursuant to this Plan, which Award is subject to the requirements of such
Amended Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
6. General Terms and Conditions of Options and Rights. The Committee shall
have full and complete authority and discretion, subject to Office of Thrift
Supervision Regulations and except as expressly limited by the Plan, to grant
Options and/or Rights and to provide the terms and conditions (which need not be
identical among Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions: (i) the Exercise Price of any
Option or Right, which shall not be less than the Market Value per Share at the
date of grant of such Option or Right, (ii) the number of Shares subject to, and
the expiration date of, any Option or Right, which expiration date shall not
exceed ten years from the date of grant, (iii) the manner, time and rate
(cumulative or otherwise) of exercise of such Option or Right, and (iv) the
restrictions, if any, to be placed upon such Option or Right or upon Shares
which may be issued upon exercise of such Option or Right. The Committee may, as
a condition of granting any Option or Right, require that a Participant agree
not to thereafter exercise one or more Options or Rights previously granted to
such Participant. Notwithstanding the foregoing and subject to compliance with
applicable Office of Thrift Supervision Regulations, no individual shall be
granted Awards in any calendar year with respect to more than 25% of the total
shares subject to the Plan.
Furthermore, at the time of any Award, the Participant shall enter into an
agreement with the Corporation in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Option Agreement").
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7. Exercise of Options or Rights.
(a) Except as provided herein, an Option or Right granted under the Plan shall
be exercisable during the lifetime of the Participant to whom such Option
or Right was granted only by such Participant and, except as provided in
paragraphs (c) and (d) of this Section 7, no such Option or Right may be
exercised unless at the time such Participant exercises such Option or
Right, such Participant has maintained Continuous Service since the date of
grant of such Option or Right. Cash settlements of Rights may be made only
in accordance with any applicable restrictions pursuant to Rule 16b-3(e)
under the Securities Exchange Act of 1934 or any similar or successor
provision.
(b) To exercise an Option or Right under the Plan, the Participant to whom such
Option or Right was granted shall give written notice to the Corporation in
form satisfactory to the Committee (and, if partial exercises have been
permitted by the Committee, by specifying the number of Shares with respect
to which such Participant elects to exercise such Option or Right) together
with full payment of the Exercise Price, if any and to the extent required.
The date of exercise shall be the date on which such notice is received by
the Corporation. Payment, if any is required, shall be made either (i) in
cash (including check, bank draft or money order) or (ii) if permitted by
the Committee, by delivering (A) Shares already owned by the Participant
and having a fair market value equal to the applicable exercise price, such
fair market value to be determined in such appropriate manner as may be
provided by the Committee or as may be required in order to comply with or
to conform to requirements of any applicable laws or regulations, or (B) a
combination of cash and such Shares.
(c) If a Participant to whom an Option or Right was granted shall cease to
maintain Continuous Service for any reason (excluding death or disability
and termination of employment by the Corporation or any Affiliate for
cause), such Participant may, but only within the period of three months
immediately succeeding such cessation of Continuous Service and in no event
after the expiration date of such Option or Right, exercise such Option or
Right to the extent that such Participant was entitled to exercise such
Option or Right at the date of such cessation, provided, however, that such
right of exercise after cessation of Continuous Service shall not be
available to a Participant if the Committee otherwise determines and so
provides in the applicable instrument or instruments evidencing the grant
of such Option or Right. If a Participant to whom an Option or Right was
granted shall cease to maintain Continuous Service by reason of death or
disability then, unless the Committee shall have otherwise provided in the
instrument evidencing the grant of an Option or Right, all Options and
Rights granted and not fully exercisable shall become exercisable in full
upon the happening of such event and shall remain so exercisable (i) in the
event of death for the period described in paragraph (d) of this Section 7
and (ii) in the event of disability for a period of three months following
such date. If the Continuous Service of a Participant to whom an Option or
Right was granted by the Corporation is terminated for cause, all rights
under any Option or Right of such Participant shall expire immediately upon
the effective date of such termination.
(d) In the event of the death of a Participant while in the Continuous Service
of the Corporation or an Affiliate or within the three-month period
referred to in paragraph (c) of this Section 7, the person to whom any
Option or Right held by the Participant at the time of his death is
transferred by will or the laws of descent and distribution, or in the case
of an Award other than an Incentive Stock Option, pursuant to a qualified
domestic relations order, as defined in the Code or Title 1 of ERISA or the
rules thereunder may, but only to the extent such Participant was entitled
to exercise such Option or Right immediately prior to his death, exercise
such Option or Right at any time within a period of one year succeeding the
date of death of such Participant, but in no event later than ten years
from the date of grant of such Option or Right. Following the death of any
Participant to whom an Option was granted under the Plan, irrespective of
whether any Related Right shall have theretofore been granted to the
Participant or whether the person entitled to exercise such Related Right
desires to do so, the Committee may, as an alternative means of settlement
of such Option, elect to pay to the person to whom such Option is
transferred by will or by the laws of descent and distribution, or in the
case of an Option other than an Incentive Stock Option, pursuant to a
qualified domestic relations order, as defined in the Code or Title I of
ERISA or the rules thereunder, the amount by which the Market Value per
Share on the date of exercise of such Option shall exceed the Exercise
Price of such Option, multiplied by the number of Shares with respect to
which such Option is properly exercised. Any such settlement of an Option
shall be considered an exercise of such Option for all purposes of the
Plan.
(e) Notwithstanding the provisions of subparagraphs (c) and (d) above, the
Committee may, in its sole discretion, establish different terms and
conditions pertaining to the effect of termination to the extent permitted
by applicable federal and state law.
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8. Incentive Stock Options. Incentive Stock Options may be granted only to
Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii) the Exercise
Price of any Incentive Stock Option shall not be less than the Market Value per
Share on the date such Incentive Stock Option is granted, (iii) any Incentive
Stock Option shall not be transferable by the Participant to whom such Incentive
Stock Option is granted other than by will or the laws of descent and
distribution, and shall be exercisable during such Participant's lifetime only
by such Participant, (iv) no Incentive Stock Option shall be granted to any
individual who, at the time such Incentive Stock Option is granted, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Corporation or any Affiliate unless the Exercise Price
of such Incentive Stock Option is at least 110 percent of the Market Value per
Share at the date of grant and such Incentive Stock Option is not exercisable
after the expiration of five years from the date such Incentive Stock Option is
granted, and (v) the aggregate Market Value (determined as of the time any
Incentive Stock Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by a Participant in any
calendar year shall not exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall determine
whether and to what extent a Related Stock Appreciation Right shall be granted
with respect thereto, provided, however, and notwithstanding any other provision
of the Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Stock Appreciation Right were
an Incentive Stock Option and as if other rights which are Related to Incentive
Stock Options were Incentive Stock Options. In the case of a Related Option,
such Related Option shall cease to be exercisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was exercised. Upon
the exercise or termination of a Related Option, any Related Stock Appreciation
Right shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.
10. Limited Stock Appreciation Rights. At the time of grant of an Option or
Stock Appreciation Right to any Participant, the Committee shall have full and
complete authority and discretion to also grant to such Participant a Limited
Stock Appreciation Right which is Related to such Option or Stock Appreciation
Right, provided, however and notwithstanding any other provision of the Plan,
that if the Related Option is an Incentive Stock Option, the Related Limited
Stock Appreciation Right shall satisfy all the restrictions and limitations of
Section 8 hereof as if such Related Limited Stock Appreciation Right were an
Incentive Stock Option and as if all other Rights which are Related to Incentive
Stock Options were Incentive Stock Options. Subject to vesting requirements
contained in 12 C.F.R. ss. 563b.3(g)(4) or any successor regulation, a Limited
Stock Appreciation Right shall be exercisable only during the period beginning
on the first day following the date of expiration of any "offer" (as such term
is hereinafter defined) and ending on the forty-fifth day following such date.
A Limited Stock Appreciation Right shall, upon its exercise, entitle the
Participant to whom such Limited Stock Appreciation Right was granted to receive
an amount of cash equal to the amount by which the "Offer Price per Share" (as
such term is hereinafter defined) or the Market Value on the date of such
exercise, as shall have been provided by the Committee in its discretion at the
time of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any Related Option and/or
Related Stock Appreciation Right shall cease to be exercisable to the extent of
the Shares with respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option or Related Stock
Appreciation Right, any Related Limited Stock Appreciation Right shall terminate
to the extent of the Shares with respect to which such Related Option or Related
Stock Appreciation Right was exercised or terminated.
For the purposes of this Section 10, the term "Offer" shall mean any tender
offer or exchange offer for Shares other than one made by the Corporation,
provided that the corporation, person or other entity making the offer acquires
pursuant to such offer either (i) 25% of the Shares outstanding immediately
prior to the commencement of such offer
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or (ii) a number of Shares which, together with all other Shares acquired in any
tender offer or exchange offer (other than one made by the Corporation) which
expired within sixty days of the expiration date of the offer in question,
equals 25% of the Shares outstanding immediately prior to the commencement of
the offer in question. The term "Offer Price per Share" as used in this Section
10 shall mean the highest price per Share paid in any Offer which Offer is in
effect any time during the period beginning on the sixtieth day prior to the
date on which a Limited Stock Appreciation Right is exercised and ending on the
date on which such Limited Stock Appreciation Right is exercised. Any securities
or property which are part or all of the consideration paid for Shares in the
Offer shall be valued in determining the Offer Price per Share at the higher of
(A) the valuation placed on such securities or property by the corporation,
person or other entity making such Offer or (B) the valuation placed on such
securities or property by the Committee.
11. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number, class and exercise price of shares with respect to which Awards
theretofore have been granted under the Plan shall be appropriately adjusted by
the Committee, whose determination shall be conclusive.
12. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof) pursuant to a
plan or agreement the terms of which are binding upon all stockholders of the
Corporation (except to the extent that dissenting stockholders may be entitled,
under statutory provisions or provisions contained in the certificate or
articles of incorporation, to receive the appraised or fair value of their
holdings), any Participant to whom an Option or Right has been granted at least
six months prior to such event shall have the right (subject to the provisions
of the Plan and any limitation or vesting period applicable to such Option or
Right), thereafter and during the term of each such Option or Right, to receive
upon exercise of any such Option or Right an amount equal to the excess of the
fair market value on the date of such exercise of the securities, cash or other
property, or combination thereof, receivable upon such merger, consolidation or
combination in respect of a Share over the Exercise Price of such Right or
Option, multiplied by the number of Shares with respect to which such Option or
Right shall have been exercised. Such amount may be payable fully in cash, fully
in one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the discretion of the Committee.
13. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 12 shall be deemed a "change
in control": (i) any third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Company with respect to which 25% or more of the total
number of votes for the election of the Board of Directors of the Company may be
cast, (ii) as a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who were
directors of the Company shall cease to constitute a majority of the Board of
Directors of the Company or (iii) the shareholders of the Company shall approve
an agreement providing either for a transaction in which the Company will cease
to be an independent publicly owned entity or for a sale or other disposition of
all or substantially all the assets of the Company. If a tender offer or
exchange offer for Shares (other than such an offer by the Company) is
commenced, or if the event specified in clause (iii) above shall occur, unless
the Committee shall have otherwise provided in the instrument evidencing the
grant of an Option or Right, such Option or Right theretofore granted and not
fully exercisable shall become exercisable in full upon the happening of such
event; provided, however, that no Option which has been exercised or forfeited
previously shall become exercisable as a result of a Change in Control.
14. Assignments and Transfers. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
15. Employee Rights Under the Plan. No director, officer or employee shall
have a right to be selected as a Participant nor, having been so selected, to be
selected again as a Participant and no director, officer, 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
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of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation or any Affiliate.
16. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or other
action eliminating the necessity of such representation under such Securities
Act or other securities legislation. The Corporation shall not be required to
deliver any Shares under the Plan prior to (i) the admission of such shares to
listing on any stock exchange or other system on which Shares may then be
listed, and (ii) the completion of such registration or other qualification of
such Shares under any state or Federal law, rule or regulation, as the Committee
shall determine to be necessary or advisable.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provision of the Plan which is inconsistent with said
Rule shall, to the extent of such inconsistency, be inoperative and shall not
affect the validity of the remaining provisions of the Plan.
17. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, and may, in its sole discretion, withhold
sufficient Shares to cover the amount of taxes which the Corporation is required
to withhold.
18. Amendment or Termination. The Board of Directors of the Corporation may
amend, suspend or terminate the Plan or any portion thereof at any time, subject
to Office of Thrift Supervision Regulations, but (except as provided in Section
11 hereof) no amendment shall be made without approval of the stockholders of
the Corporation which shall, (i) increase the aggregate number of Shares with
respect to which Awards may be made under the Plan (except pursuant to Section
11), (ii) materially increase the benefits accruing to Participants, (iii)
materially change the requirements as to eligibility for participation in the
Plan or (iv) change the class of persons eligible to participate in the Plan;
provided, however, that no such amendment, suspension or termination shall
impair the rights of any Participant, without his consent, in any Award
theretofore made pursuant to the Plan.
19. Effective Date and Term of Plan. The Plan shall become effective upon
its ratification by stockholders of the Corporation. It shall continue in effect
for a term of ten years unless sooner terminated under Section 17 hereof.
20. Initial Grant. By, and simultaneously with, the ratification of this
Plan by the stockholders of the Corporation, each member of the Board of
Directors of the Corporation and each advisory director and director emeritus of
the Bank at the time of stockholder ratification of this Plan who is not an
Employee, is hereby granted a ten-year, Non-Qualified Stock Option to purchase
20,499 shares at an Exercise Price per share equal to the Market Value per share
of the Shares on the date of grant. In addition, subject to availability, each
non-employee director of the Corporation elected subsequent to the date of
stockholder ratification of the Plan is hereby granted as of the date he or she
is elected and qualified a ten-year Non-Qualified Stock Option to purchase
20,499 shares at an Exercise Price equal to the Market Value per share of the
Shares on the date of grant. Each such Option shall be evidenced by a
Non-Qualified Stock Option Agreement in a form approved by the Board of
Directors and shall be subject in all respects to the terms and conditions of
this Plan, which are controlling. All Options granted pursuant to this section
shall vest in five equal annual installments with the first installment vesting
on the first anniversary of the date of grant, subject to the Director
maintaining Continuous Service with the Corporation or its Affiliates since the
date of grant. All Options granted pursuant to this Section 19 shall be rounded
down to the nearest whole share to the extent necessary to ensure that no
Options to purchase stock representing fractional shares are granted.
21. Notwithstanding anything else in this Plan to the contrary, to the
extent that the Plan provides for formula awards, as defined in Rule
16b-3(c)(2)(ii) under the Securities Exchange Act of 1934, such provisions may
not be amended more than once every six months, other than to comport with
changes in the Code, ERISA or the rules thereunder.
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Exhibit B
PEEKSKILL FINANCIAL CORPORATION
AMENDED AND RESTATED 1996 RECOGNITION AND RETENTION PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, executive officers and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary corporation" of
the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" - means the grant of Restricted Stock pursuant to the terms of
Section 13 of the Plan or by the Committee, as provided in the Plan.
"Bank" - means First Federal Savings Bank, a savings institution and its
successors.
"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.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee of the Board of Directors of the
Corporation referred to in Section 6 hereof.
"Continuous Service" - means the absence of any interruption or termination
of service as a director, director emeritus, advisory director, executive
officer or employee of the Corporation or any Affiliate. Service shall not be
considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Corporation or any Affiliate or in the case of
transfers between payroll locations of the Corporation or between the
Corporation, its subsidiaries or its successor. With respect to any director
emeritus or advisory director, continuous service shall mean availability to
perform such functions as may be required of such individuals.
"Conversion" - means the conversion of the Bank from the mutual to the
stock form of organization.
"Corporation" - means Peekskill Financial Corporation, a Delaware
corporation.
"Disability" - means any physical or mental impairment which qualifies an
employee, director, director emeritus or advisor director for disability
benefits under any applicable long-term disability plan maintained by the Bank
or an Affiliate, or, if no such plan applies, which would render such employee
or director, in the judgment of the Committee, unable to perform his customary
duties and responsibilities.
"Disinterested Person" - means any member of the Board of Directors of the
Corporation who (A) is an outside director as defined under Section 162 (m) of
the Code and the regulations thereunder and (B) a person who
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within the prior year has not been, and is not being, granted any awards related
to the Shares under this Plan or any other plan of the Corporation or any of its
Affiliates except for awards which (i) are calculated in accordance with a
formula as contemplated in paragraph (c)(2)(ii) of Rule 16b-3 ("Rule 16b-3")
under the Securities Exchange Act of 1934; (ii) result from participation in an
ongoing securities acquisition plan meeting the conditions of paragraph (d)(2)
of Rule 16b-3; or (iii) arise from an election by a director to receive all or
part of his board fees in securities. No recipient of a stock award granted
pursuant to Section 12 hereof shall be deemed not to be a Disinterested Person
solely by reason of such grant.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Participant" - means any director, director emeritus, advisory director,
executive officer or employee of the Corporation or any Affiliate who is
selected by the Committee to receive an Award.
"Plan" - means the 1996 Recognition and Retention Plan of the Corporation.
"Restricted Period" - means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 3
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" - means Shares which have been contingently awarded to a
Participant by the Committee subject to the restrictions referred to in Section
3 hereof, so long as such restrictions are in effect.
"Shares" - means the common stock, par value $0.01 per share, of the
Corporation.
3. Terms and Conditions of Restricted Stock. The Committee shall have full
and complete authority, subject to the limitations of the Plan, to grant Awards
and, in addition to the terms and conditions contained in paragraphs (a) through
(f) of this Section 3, to provide such other terms and conditions (which need
not be identical among Participants) in respect of such Awards, and the vesting
thereof, as the Committee shall determine, subject to OTS regulations.
(a) At the time of an Award, the Committee shall establish for each Participant
a Restricted Period which shall not be less than five years, during which
or at the expiration of which, as the Committee shall determine and provide
in the agreement referred to in paragraph (d) of this Section 3, the Shares
awarded as Restricted Stock shall vest, and subject to any such other terms
and conditions as the Committee shall provide, Shares of Restricted Stock
may not be sold, assigned, transferred, pledged, voted or otherwise
encumbered by the Participant, except as hereinafter provided, during the
Restricted Period. Except for such restrictions, and subject to paragraphs
(c) and (e) of this Section 3 and Section 4 hereof, the Participant as
owner of such shares shall have all the rights of a stockholder (including
but not limited to the right to receive all dividends paid on such vested
shares and the right to vote such vested shares). The Committee shall have
the authority, in its discretion, subject to compliance with OTS
regulations, to accelerate the time at which any or all of the restrictions
shall lapse with respect thereto, or to remove any or all of such
restrictions, whenever it may determine that such action is appropriate by
reason of changes in applicable tax or other laws or other changes in
circumstances occurring after the commencement of such Restricted Period.
(b) If a Participant ceases to maintain Continuous Service for any reason
(other than death, or disability), unless the Committee shall otherwise
determine, all Shares of Restricted Stock theretofore awarded to such
Participant and which at the time of such termination of Continuous Service
are subject to the restrictions imposed by paragraph (a) of this Section 3
shall upon such termination of Continuous Service be forfeited and returned
to the Corporation. If a Participant ceases to maintain Continuous Service
by reason of death, or disability, then Restricted Stock still subject to
restrictions imposed by paragraph (a) of this Section 3 will be free of
those restrictions.
B-2
(c) Each certificate in respect of Shares of Restricted Stock awarded under the
Plan shall be registered in the name of the Participant and deposited by
the Participant, together with a stock power endorsed in blank, with the
Corporation 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 1996 Recognition and
Retention Plan of Peekskill Financial Corporation. Copies of such
Plan are on file in the offices of the Secretary of Peekskill
Financial Corporation, 1019 Park Street, Peekskill, New York
10566.
(d) At the time of any Award, the Participant shall enter into an Agreement
with the Corporation in a form specified by the Committee, agreeing to the
terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Restricted Stock Agreement").
(e) The payment to the Participant of any dividends declared or paid by the
Corporation on any Restricted Stock shall be deferred and held by the
Corporation for the account of the Participant until the earlier to occur
of (i) the lapsing of the restrictions imposed under paragraph (a) of this
Section 3 or (ii) the forfeiture of such shares under paragraph (b) of this
Section 3. There shall be credited at the end of each year (or portion
thereof) interest on the amount of the Participant's account at the
beginning of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends, together with
interest accrued thereon, shall be made upon the earlier to occur of the
lapsing of the restrictions imposed under paragraph (a) of this Section 3
or upon death or disability. Shares of Restricted Stock shall not be voted
by the Participant during the Restricted Period. Shares of Restricted Stock
still subject to restriction shall be voted by an independent party to be
named in the Restricted Stock Agreement.
(f) At the expiration of the restrictions imposed by paragraph (a) of this
Section 3, the Corporation shall redeliver to the Participant (or where the
relevant provision of paragraph (b) of this Section 3 applies in the case
of a deceased Participant, to his legal representative, beneficiary or
heir) the certificate(s) and stock power deposited with it pursuant to
paragraph (c) of this Section 3 and the Shares represented by such
certificate(s) shall be free of the restrictions referred to in paragraph
(a) of this Section 3.
4. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number and class of shares with respect to which Awards theretofore have been
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 Participant 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 Corporation in the manner
provided in Section 3 hereof.
5. Assignments and Transfers. During the Restricted Period, no Award nor
any right or interest of a Participant under the Plan in any instrument
evidencing any Award under the Plan may be assigned, encumbered or transferred
except (i) in the event of the death of a Participant, by will or the laws of
descent and distribution, or (ii) pursuant to a qualified domestic relations
order as defined in the Code or Title I of ERISA or the rules thereunder.
6. Administration. The Plan shall be administered by a Committee consisting
of two or more members, each of whom shall be a Disinterested Person. The
members of the Committee shall be appointed by the Board of Directors of the
Corporation. Except as limited by the express provisions of the Plan, the
Committee shall have sole and complete authority and discretion, subject to with
OTS regulations to (i) select Participants and grant
B-3
Awards; (ii) determine the number of Shares to be subject to types of Awards
generally, as well as to individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under the
Plan under a quantifiable formula established by the Board of Directors and
based on the Corporation's performance; (iv) prescribe the form and terms of
instruments evidencing such grants; and (v) establish from time to time
regulations for the administration of the Plan, interpret the Plan, and make all
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may maintain, and update from time to time as appropriate, a list
designating selected directors as Disinterested Persons. The purpose of such
list shall be to evidence the status of such individuals as Disinterested
Persons, and the Board of Directors may appoint to the Committee any individual
actually qualifying as a Disinterested Person, regardless of whether identified
as such on said list.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
7. Shares Subject to Plan. Subject to adjustment by the operation of
Section 4 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 4% of the total Shares issued in the Bank's
Conversion. The Shares with respect to which Awards may be made under the Plan
may be either authorized and unissued Shares or issued Shares heretofore or
hereafter reacquired and held as treasury Shares. An Award shall not be
considered to have been made under the Plan with respect to Restricted Stock
which is forfeited and new Awards may be granted under the Plan with respect to
the number of Shares as to which such forfeiture has occurred. Any Award made
pursuant to this Plan, which Award is subject to the requirements of Office of
Thrift Supervision Regulations, shall vest in five equal annual installments
with the first installment vesting on the one year anniversary of the date of
grant, except in the event of death or disability in which case all unvested
shares shall vest immediately.
In the event that Office of Thrift Supervision Regulations are amended (the
"Amended Regulations") to permit shorter vesting periods, any Award made
pursuant to this Plan, which Award is subject to the requirements of such
Amended Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
The Corporation's obligation to deliver Shares with respect to an Award
shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Participant to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of the Securities Act of
1933 or any other Federal, state or local securities legislation or regulation.
It may be provided that any representation requirement shall become inoperative
upon a registration of the Shares or other action eliminating the necessity of
such representation under such Securities Act or other securities legislation.
The Corporation shall not be required to deliver any Shares under the Plan prior
to (i) the admission of such shares to listing on any stock exchange on which
Shares may then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
8. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 8 shall be deemed a "change
in control": (i) any third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Company with respect to which 25% or more of the total
number of votes for the election of the Board of Directors of the Company may be
cast, (ii) as a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who were
directors of the Company shall cease to constitute a majority of the Board of
Directors of the Company or (iii) the shareholders of the Company shall approve
an agreement providing either for a transaction in which the Company will cease
to be an independent publicly owned entity or for a sale or other disposition of
all or substantially all the assets of the Company. If a tender offer or
exchange offer for Shares (other than such an offer by the Company) is
commenced, or if the event specified
B-4
in clause (iii) above shall occur, unless the Committee shall have otherwise
provided in the Restricted Stock Agreement evidencing the grant of Restricted
Stock, such Restricted Stock theretofore granted and on which the restrictions
have not previously lapsed shall become unrestricted in full upon the happening
of such event; provided, however, that no Restricted Stock which has been
forfeited previously shall become unrestricted as a result of a Change in
Control.
9. Employee Rights Under the Plan. No director, director emeritus, advisory
director, officer or employee shall have a right to be selected as a Participant
nor, having been so selected, to be selected again as a Participant and no
director, officer, 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 Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any officer or employee any right to be
retained in the employ of the Corporation, the Bank or any Affiliate.
10. Withholding Tax. Upon the termination of the Restricted Period with
respect to any shares of Restricted Stock (or at any such earlier time, if any,
that an election is made by the Participant under Section 83(b) of the Code, or
any successor provision thereto, to include the value of such shares in taxable
income), the Corporation shall withhold from any payment or distribution made
under this Plan sufficient Shares to cover any applicable withholding and
employment taxes. The Corporation shall have the right to deduct from all
dividends paid with respect to shares of Restricted Stock the amount of any
taxes which the Corporation is required to withhold with respect to such
dividend payments. No discretion or choice shall be conferred upon any
Participant with respect to the form, timing or method of any such tax
withholding.
11. Amendment or Termination. The Board of Directors of the Corporation may
amend, suspend or terminate the Plan or any portion thereof at any time, subject
to OTS regulations; provided, however, that no such amendment, suspension or
termination shall impair the rights of any Participant, without his consent, in
any Award theretofore made pursuant to the Plan.
Notwithstanding anything in this Plan to the contrary, to the extent that
the Plan provides for formula awards, as defined in Rule b-3(c)(2)(ii) under the
Securities Exchange Act of 1934, as amended, such provisions may not be amended
more than once every six months, other than to comport with changes in the Code,
ERISA or the rules thereunder.
12. Term of Plan. The Plan shall become effective upon its ratification by
the stockholders of the Corporation. It shall continue in effect for a term of
ten years unless sooner terminated under Section 11 hereof.
13. Director Awards. By, and simultaneously with, the ratification of this
Plan by the stockholders of the Corporation, each member of the Board of
Directors of the Corporation, who is not a full-time employee, is hereby granted
an Award equal to 8,199 shares of Common Stock. In addition, each director
elected subsequent to the Conversion shall be issued, as of the date he is
elected and qualified, an Award equal to 8,199 shares of Common Stock, subject
to availability. Each such Award shall be evidenced by a Restricted Stock
Agreement in a form approved by the Corporation and shall be subject in all
respects to the terms and conditions of this Plan, which are controlling. All
Awards granted pursuant to this Section 12 shall be rounded down to the nearest
whole share to the extent necessary to ensure that no shares of Restricted Stock
representing fractional shares are issued. Each of the Awards granted in this
Section 12 shall be earned in five equal annual installments, with the first
installment vesting on the one-year anniversary of the date of grant, as long as
the director maintains Continuous Service with the Corporation or its
affiliates, provided, however, no Award shall be earned in any fiscal year in
which the Bank fails to meet all of its regulatory capital requirements.
B-5
PEEKSKILL FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 1998
The undersigned hereby appoints the Board of Directors of Peekskill
Financial Corporation (the "Company"), with full powers of substitution, to act
as attorneys and proxies for the undersigned to vote all shares of capital stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting") to be held at the main office of the Company,
located at 1019 Park Street, Peekskill, New York on October 21, 1998 at 3:30
p.m. and at any and all adjournments and postponements thereof.
1. The election as directors of all nominees listed below (except as marked to
the contrary):
|_| FOR |_| VOTE WITHHELD
INSTRUCTION: To withhold your vote for any individual nominee, strike a
line in that nominee's name below.
ELDORUS MAYNARD ROBERT E. FLOWER
2 The approval of the adoption of the Amended and Restated Peekskill
Financial Corporation 1996 Stock Option and Incentive Plan:
|_| FOR |_| AGAINST |_| ABSTAIN
3 The approval of the adoption of the Amended and Restated Peekskill
Financial Corporation 1996 Recognition and Retention Plan:
|_| FOR |_| AGAINST |_| ABSTAIN
4 The ratification of the appointment of KPMG Peat Marwick LLP, as auditors
for the Company for the fiscal year ending June 30, 1998.
|_| FOR |_| AGAINST |_| ABSTAIN
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL AND EACH OF THE NOMINEES LISTED ABOVE.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
The Board of Directors recommends a vote "FOR" the proposal
and the election of the nominees listed above.
(Continued and to be SIGNED on Reverse Side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated: , 1998
--------------------- ----------------------------------------
Signature of Stockholder
Please sign exactly as your name(s)
appear(s) to the left. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE