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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Iroquois Bancorp, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Marianne R. O'Connor
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(4) and 0-11.
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: /1/
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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[X] Check box if any part of the fee 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:
$125.00
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(2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Materials
---------------------------------------------
(3) Filing Party:
Iroquois Bancorp, Inc.
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(4) Date Filed:
March 19, 1996
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- - ---------------
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
IROQUOIS BANCORP, INC.
115 Genesee Street
Auburn, New York 13021
(315) 252-9521
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 1996
TO THE SHAREHOLDERS OF IROQUOIS BANCORP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Iroquois
Bancorp, Inc. (the "Company"), will be held at the Holiday Inn, 75 North Street,
Auburn, New York on Thursday, May 9, 1996 at 10:00 a.m., to consider and vote
upon the following matters:
1. The election of three (3) directors to serve for a term of three (3)
years and until their successors have been duly elected and qualified.
2. A proposal to amend the Company's Restated Certificate of Incorporation
to increase the Company's authorized shares of common stock from 3,000,000 to
6,000,000.
3. A proposal to approve the Company's 1996 Stock Option Plan.
4. The ratification of the appointment of independent auditors for the
fiscal year ending December 31, 1996.
5. The transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
The close of business on March 29, 1996 has been fixed as the record date
for the determination of shareholders who will be entitled to notice of and to
vote at the Annual Meeting.
By Order of the Board of Directors
James H. Paul, Secretary
April 1, 1996
THE BOARD OF DIRECTORS REQUESTS THAT YOU MARK, SIGN, AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE POSTPAID ENVELOPE PROVIDED.
IROQUOIS BANCORP, INC.
115 Genesee Street
Auburn, New York 13021
(315) 252-9521
_______________________
PROXY STATEMENT
_______________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 1996
_______________________________________
SOLICITATION AND VOTING OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Iroquois
Bancorp, Inc. (the "Company") for use in connection with the Annual Meeting of
Shareholders to be held May 9, 1996. The matters to be considered and acted
upon at such meeting are referred to in the preceding notice and are more fully
discussed below. Only if the enclosed proxy card is properly executed and
returned to the Company will the shares represented thereby be voted. If no
choices are specified on the returned card, the shares will be voted for each of
the persons nominated as director and in favor of management's proposals, except
with respect to broker non-votes for proposal number 3 as described below. The
proxy may be revoked by written notice to the Company prior to the meeting or by
written notice to the Secretary at the meeting at any time prior to being voted.
The first date on which this proxy statement and accompanying proxy are being
sent to shareholders is on or about April 1, 1996.
Proxies may be solicited by mail, personal interview, telephone, or
telegraph. Directors, officers, and employees of the Company may solicit
proxies by any such method without additional compensation. Costs of all proxy
solicitation will be paid by the Company, including reimbursement of brokerage
firms and other nominees for expenses of forwarding proxy solicitation material
to the beneficial owners for whom they held the shares.
The common stock of the Company is its only class of voting securities and
each share entitles the holder to one vote on all matters to come before the
meeting. The Board of Directors has fixed the close of business on March 29,
1996 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting. On March 29, 1996, there were 2,348,711 shares
of the Company's common stock outstanding. The presence, in person or by proxy,
of at least a majority of the total number of shares of common stock outstanding
and entitled to vote is necessary to constitute a quorum and in the event there
are not sufficient votes, the Annual Meeting may be adjourned.
Directors shall be elected by a plurality of the eligible votes cast and
the ratification of the appointment of independent auditors will be determined
by a majority of the eligible votes cast. Abstentions, in person or by proxy,
shall be counted toward a quorum, but abstentions under New York
law are not deemed to be votes cast and therefore abstentions have no effect on
the outcome of the vote, which requires either a plurality or majority of the
"votes cast," depending upon the proposal. Votes withheld in connection with
the election of one or more of the nominees for director will not be counted as
votes cast. The proposals to amend the Company's Restated Certificate of
Incorporation and to approve the Company's 1996 Stock Option Plan require the
affirmative vote of a majority of the shares eligible to vote. Absententions,
therefore, will have the same impact as a negative vote with respect to those
proposals.
All of the items on the agenda for shareholder approval, except the
approval of the 1996 Stock Option Plan, are deemed "discretionary" items upon
which brokerage firms may vote in their discretion on behalf of beneficial
owners who have not furnished voting instructions within ten days of the Annual
Meeting of Shareholders. With respect to those items, "broker non-votes" which
occur for "non-discretionary" items on which brokers cannot vote if beneficial
owners have not given instruction by proxy will not be a factor. Approval of
the Company's 1996 Stock Option Plan, however, is a "non-discretionary" item and
broker non-votes will have the same effect as a negative vote on that matter.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The table below indicates as of February 1, 1996 the only holders known to
the Company to be the beneficial owner of more than 5% of the total 2,340,242
issued and outstanding shares of the Company's common stock.
Amount and Nature Percent of
of Outstanding
Name and Address Beneficial Ownership/1/ Common Stock
- - ---------------- ----------------------- ------------
The Baird Family 232,376/2/ 9.54%
c/o Brian D. Baird
120 Delaware Avenue
Buffalo, New York 14202
Iroquois Bancorp, Inc. Employee 218,125/3/ 8.95%
Stock Ownership Plan
115 Genesee Street
Auburn, New York 13021
______________________
/1/ Except as otherwise noted, such beneficial owner has sole voting and
investment power with respect to the stock.
/2/ Such shares are beneficially owned either directly or as trustees or
custodians for other family members or as trustees of the Cameron Baird
Foundation. The respective beneficial owners have sole investment and
voting power with respect to their shares.
/3/ Such shares are held in trust for the participants in the plan who are
the beneficial owners and who direct the voting of their allocated shares
in the trust. All unallocated shares in the trust are voted by the
independent trustee.
As of February 1, 1996, no director except Brian Baird and no executive
officer of the Company or any subsidiary beneficially owned more than 5% of any
class of the Company's outstanding stock. All directors and executive officers
as a group (14 persons) beneficially owned 790,608 shares of the Company's
common stock, including exercisable options, representing approximately 32.5% of
the 2,340,242 outstanding shares of common stock plus 96,000 outstanding
exercisable options. Those ownership interests are set forth in the following
table.
2
Amount and
Nature of Percent
Beneficial Common Stock
Name Positions Held Ownership/1/ Outstanding
- - ---- -------------- ------------ ------------
Joseph P. Ganey Chairman of the Board 63,647/2/ 2.6%
Richard D. Callahan President and CEO, 52,089/3/ 2.1
Director
Brian D. Baird Director 232,376/4/ 9.5
John Bisgrove, Jr. Director 103,271/5/ 4.2
Peter J. Emerson Director 58,678/6/ 2.4
Russel C. Fielding Director 9,617/7/ .4
William J. Humes, Jr. Director 9,708 .4
Arthur A. Karpinski Director 21,428 .9
Henry D. Morehouse Director 9,331 .4
Richard J. Notebaert, Jr. Vice President 19,592/8/ .8
Marianne R. O'Connor Treasurer and 25,732/9/ 1.1
CFO
James H. Paul Executive Vice 34,602/10/ 1.4
President, Secretary
W. Anthony Shay, Jr. Vice President 5,620/11/ .2
Lewis E. Springer, II Director 61,455 2.5
All directors and executive officers 790,608/12/ 32.5%
as a group (14 persons)
- - ---------------
/1/ Except as otherwise noted, each beneficial owner listed has sole voting and
investment power with respect to the stock.
/2/ Includes 4,341 shares held jointly with spouse.
/3/ Includes 900 shares held by spouse, and exercisable options to purchase
47,800 shares under the Stock Option Plan.
/4/ Such shares are beneficially owned either directly or as trustees or
custodians for other family members or as trustees of the Cameron Baird
Foundation. The respective beneficial owners have sole investment and
voting power with respect to their shares.
/5/ Includes 3,817 shares held as custodian for minor children and 266 shares
held by spouse.
/6/ Includes 2,000 shares held by spouse, 1,000 shares held by an independent
trustee for a child, and 36,000 shares held by the F.L. Emerson Foundation,
Inc., of which he is a director and officer, and as to which he disclaims
beneficial ownership.
/7/ Includes 1,081 shares held by spouse.
/8/ Includes exercisable options to purchase 7,200 shares under the Stock
Option Plan.
/9/ Includes 209 shares held as custodian for minor children, and exercisable
options to purchase 8,200 shares under the Stock Option Plan.
/10/ Includes exercisable options to purchase 7,000 shares under the Stock
Option Plan.
/11/ Includes exercisable options to purchase 3,600 shares under the Stock
Option Plan.
/12/ Includes 800 shares held in trust under the Directors Stock Award Trust;
2,400 in the Chairman's Stock Award Trust; and 80,262 shares held in the
ESOP that have not been awarded or allocated and are therefore voted by
the ESOP independent trustee.
3
The following table sets forth information with respect to the shares of
the Company's Floating Rate Cumulative Preferred Stock, Series A (the "Series A
Preferred Stock"), which is non-voting stock, beneficially owned by each
director and each executive officer named in the Summary Compensation Table on
Page 8 and by all directors and officers as a group as of February 1, 1996. As
of that date, there were 31,355 shares of the Series A Preferred Stock issued
and outstanding.
Amount and Percent of
Nature of Series A
Beneficial Preferred Stock
Name Positions Held Ownership/1/ Outstanding
- - ---- -------------- ------------ ---------------
Joseph P. Ganey Chairman of the Board 100/2/ .32%
Arthur A. Karpinski Director 700/3/ 2.23
All directors and executive officers
as a group (14 persons) 800 2.55%
______________________
/1/ Except as otherwise noted, each beneficial owner listed has sole
voting and investment power with respect to the stock.
/2/ All shares held jointly with spouse.
/3/ All shares held by spouse.
The following table sets forth the information with respect to the shares
of the Company's Floating Rate Noncumulative Preferred Stock, Series B (the
"Series B Preferred Stock"), which is non-voting stock, beneficially owned by
each director and executive officer and by all directors and officers as a group
as of February 1, 1996. As of that date there were 19,153 shares of the Series
B Preferred Stock issued and outstanding.
Amount and Percent of
Nature of Series B
Beneficial Preferred Stock
Name Positions Held Ownership/1/ Outstanding
- - ---- -------------- ------------ ---------------
Joseph P. Ganey Chairman of the Board 148 .77%
Russel C. Fielding Director 100 .52
Arthur A. Karpinski Director 520/2/ 2.72
Marianne R. O'Connor Treasurer and Chief
Financial Officer 10/3/ .05
James H. Paul Executive Vice President 175/4/ .92
All directors and executive officers
as a group (14 persons) 953 4.98%
- - -----------------------
/1/ Except as otherwise noted, each beneficial owner listed has sole
voting and investment power with respect to the stock.
/2/ Includes 500 shares held by spouse.
/3/ All shares as custodian for minor children.
/4/ Includes 82 shares held by spouse.
4
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
In accordance with the rules of the Securities and Exchange Commission
under Section 16(a) of the Securities Exchange Act of 1934, as awarded,
directors, executive officers, and beneficial owners of 10% or more of the
Company's stock must file certain reports of stock ownership and changes of
stock ownership. Based solely upon its review of copies of such reports
received by it, or written representations of certain reporting persons that no
forms were required to be filed, Iroquois believes that for the fiscal year
ended December 31, 1995 all reports required by such reporting persons were
timely filed with the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of ten (10)
directors. The Board is divided into a total of three classes, with terms
expiring in 1996, 1997, and 1998. At the Annual Meeting, three (3) directors
will be elected for a term of office expiring in 1999 and until the election and
qualification of their successors.
It is intended that, if no contrary specification is made, the persons
named on the proxy card will vote for the nominees named below. The Board
believes that all of the nominees will be available and able to serve as
directors, but if for any reason any of these persons should not be available or
able to serve, the proxies may exercise discretionary authority to vote for a
substitute or substitutes. All nominees for election in 1996 have been
previously elected by the shareholders of the Company.
There is set forth below certain information about the nominees for
election to the Board of Directors, as well as about those present directors
whose term of office will continue after the meeting. The names of the directors
and nominees below represent a full Board of Directors. Except for Brian D.
Baird, Russel C. Fielding, and Henry D. Morehouse all present directors,
including the nominees, are also serving as directors of the Company's
subsidiary, Cayuga Savings Bank. Mr. Fielding and Mr. Morehouse also serve on
the Board of Directors of the Company's other subsidiary, The Homestead Savings
(FA).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES FOR ELECTION AS
DIRECTORS.
5
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS OF OFFICE EXPIRING IN 1999:
- - ------------------------------------------------------------------------
WILLIAM J. HUMES, age 66, a director of Cayuga Savings Bank since January, 1987,
is retired, having served as President of a steel manufacturing company,
Auburn Steel Company, Inc. and as Chairman and Chief Executive Officer of
Arkansas Steel Associates, its subsidiary, since 1989.
ARTHUR A. KARPINSKI, age 67, a director of Cayuga Savings Bank since 1969, is
now retired from the practice of periodontics.
HENRY D. MOREHOUSE, age 66, a director of The Homestead Savings since 1968, is
the owner of Morehouse Appliances, a retail appliance business, where he has
been employed since 1942.
PRESENT DIRECTORS WHOSE TERMS OF OFFICE EXPIRE IN 1998:
- - -------------------------------------------------------
PETER J. EMERSON, age 55, a director of Cayuga Savings Bank since 1971, is a
Director and President of the F.L. Emerson Foundation, Inc., a charitable
foundation.
RUSSEL C. FIELDING, age 75, became a director in 1991 pursuant to the terms of
the transaction in which Iroquois acquired The Homestead Savings (FA), where Mr.
Fielding has served as a director since 1971 and continues to serve. He is a
director and the retired Vice President and Treasurer of Rome Sentinel Company,
a newspaper business in Rome, New York.
JOSEPH P. GANEY, age 72, a director of Cayuga Savings Bank since 1974, was named
Chairman of the Board of Cayuga Savings Bank in 1985, and remains as Chairman of
the Board of the Company as well. Having served as Chief Executive Officer since
1976, he retired at the end of 1988. Before joining Cayuga Savings Bank as
Executive Vice President in 1971, Mr. Ganey had 29 years of banking experience.
LEWIS E. SPRINGER II, age 57, a director of Cayuga Savings Bank since January,
1987, has been President of Creative Electric, Inc. since 1967 and Chairman of
its subsidiary, Andersen Laboratories, since 1989. Both companies manufacture
electronic components for guidance systems and other applications.
PRESENT DIRECTORS WHOSE TERMS OF OFFICE EXPIRE IN 1997:
- - -------------------------------------------------------
BRIAN D. BAIRD, age 45, became a director on July 1, 1990, through an expansion
of the Board, and was thereafter elected by the shareholders at the Company's
next Annual Meeting. He is an attorney with the law firm of Kavinoky and Cook
in Buffalo, New York, where he has practiced law since 1983.
JOHN BISGROVE, JR., age 56, a director of Cayuga Savings Bank since 1978, is the
owner and President of Sunrise Farms with business activity in cattle breeding,
horses and related interests. He is also a partner in Martin Point Development,
a real estate development partnership.
RICHARD D. CALLAHAN, age 53, became a director of Iroquois and Cayuga Savings
Bank in 1994 after his appointment as chief executive officer and president of
both the Company and Cayuga Savings. Prior to joining Iroquois, he was Regional
Executive Vice President, Regional President, and Senior Executive Vice
President of Operations and Marketing, in that order, for Marine Midland Bank
from 1983 to 1993, after 18 years of prior banking experience.
6
There are no family relationships between any director, executive officer,
or any person nominated or chosen by the Board to become a director or executive
officer.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held 4 regular quarterly meetings during 1995, and
all of the directors attended more than 75% of the aggregate of the total number
of Board meetings and meetings of committees of the Board on which they served
except Messrs. Humes and Springer, whose absences were excused for good cause.
The Board of Directors currently has three standing committees: Executive,
Audit, and Nominating/Personnel. The chairman of the Board and chairman of the
Executive Committee are members ex-officio of all committees. The principal
responsibilities of all of the committees and the number of meetings held during
1995 are set forth below.
Executive Committee: The Executive Committee consists of 7 appointed
members, and 1 ex-officio member. It is authorized to exercise the powers of
the Board of Directors to take action between regular meetings of the Board.
This Committee, which met 5 times in 1995, presently consists of Mr. Humes who
serves as chairperson, and Messrs. Baird, Bisgrove, Callahan, Fielding,
Karpinski, and Springer as appointed members. Mr. Ganey serves ex-officio with
vote.
Audit Committee: The Audit Committee consists of 5 appointed members and 2
members ex-officio. The Committee examines and reviews the accounting,
reporting, and financial practices of the Company. The Committee also receives
reports of the Company's independent auditors, and reviews and approves all non-
audit services performed by the independent auditors. This Committee presently
consists of Mr. Emerson, who serves as chairperson, and Messrs. Baird, Fielding,
Karpinski and Morehouse, as appointed members, with Mr. Ganey and Mr. Humes
serving ex-officio with vote. During 1995, the Committee met 4 times.
Nominating/Personnel Committee: The Nominating/Personnel Committee
consists of 4 appointed members and 2 ex-officio members, including Mr. Bisgrove
as chairperson and Messrs. Callahan, Fielding and Springer. Messrs. Ganey and
Humes serve ex-officio with vote. This committee reviews the qualifications of
candidates for the Board and recommends a slate of nominees for election at the
annual meeting of shareholders, as well as considers nominees recommended by
shareholders on the same basis as other persons considered provided such names
are submitted in sufficient time for the Committee to review the person's
qualifications. The Committee is also responsible for Company policy regarding
general management and human resource matters, including compensation. With the
exception of Mr. Callahan, the Nominating/Personnel Committee members serve as
the Board's compensation committee and have been designated the Stock Option
Committee to administer the Company's Stock Option Plan. The Committee met 8
times in 1995.
DIRECTOR COMPENSATION
The Company compensates its non-employee directors $1,600 per year in cash
for service on the Board of the Company. Directors who reside beyond a 50 mile
radius of the Company's principal office receive reimbursement for travel
expenses, and all directors receive a fee of $150 for each committee meeting
attended, with the chairperson presiding at each committee meeting receiving
$175. Directors who serve on the boards of subsidiaries may also receive
compensation for such service from the subsidiary in accordance with policy set
by its Board of Directors.
To enable the Company to recognize the long and dedicated service of
certain individuals, non-employee directors of the Company's financial
institution subsidiaries are entitled to an award of 100
7
shares of the Company's common stock following each full year of completed
service, up to a maximum award of 1,000 shares. This program was implemented in
1987 by Cayuga Savings Bank prior to the holding company reorganization through
the purchase of 12,000 shares of its stock on the over-the-counter market, at
prevailing market prices, to be held in a Directors Stock Award Trust from which
the shares are from time to time distributed to directors under the program. In
1989, Cayuga Savings Bank established a similar trust consisting of 12,000
shares of its common stock purchased on the over-the-counter market, at
prevailing market prices, for a Chairman's Stock Award Trust, pursuant to which
the Chairman of the Board at the time becomes entitled to an award of 1,200
shares per year, until all shares in the Trust have been distributed. The stock
granted under these programs in the past and remaining in both Trusts now
consists of the Company's common stock. The Company adopted the Chairman and
Directors Stock Award programs and intends to continue to award shares under the
programs. During 1995, the Company awarded 1,600 of the shares held in the
Directors Stock Award Trust to directors of Cayuga Savings Bank and The
Homestead Savings (FA) for their service as directors of the subsidiaries, and
1,200 shares from the Chairman's Trust to the Chairman of the Board.
INSURANCE
As authorized by law and its Bylaws, the Company maintains insurance for
itself and subsidiaries to indemnify directors and officers. It had obtained
insurance from Progressive Casualty Insurance Company of Lyndhurst, Ohio,
insuring the Company and its subsidiaries against any obligation incurred as a
result of indemnification of their directors and officers and insuring such
persons for liabilities for which they may not be indemnified. This insurance
policy has a three-year term expiring October 30, 1998, with coverage of
$5,000,000 aggregate annual limitation. As of this date, no sums have been paid
under this policy. The current annual premium is $32,541.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, for the three years ended December 31, 1995, the
cash compensation paid to the Company's chief executive officer and other
executive officers of the Company who received total compensation in excess of
$100,000. As explained in the Report on Executive Compensation below,
compensation is paid by the subsidiary for which each individual also serves in
an executive capacity.
8
Annual Compensation Long Term Compensation
------------------- ------------------------------
Awards Payouts
- - ----------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Awards Options Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)
- - --------- ---- --------- -------- ------- ---------- --------- ------- ----------
Richard D. 1995 181,000 47,965 5,000 ----- 17,800 ---- 14,542/1/
Callahan 1994 105,673 ----- ----- ----- 15,000 ---- 11,413
CEO
James H. 1995 102,000 19,615 5,000 ----- 7,000 ---- 12,094/2/
Paul 1994 95,000 ----- 5,000 ----- ---- ---- 10,916
COO 1993 85,000 18,268 5,000 ----- ---- ---- 10,550
Richard J. 1995 105,000 16,916 5,000 ----- 7,200 ---- 14,901/3/
Notebaert, Jr. 1994 96,000 18,480 5,000 ----- ---- ---- 14,402
Vice President 1993 90,000 21,300 5,000 ----- ---- ---- 9,472
Marianne R. 1995 91,000 19,356 3,823 ----- 6,200 ---- 9,494/4/
O'Connor 1994 85,000 ----- 4,215 ----- ---- ---- 9,779
CFO 1993 76,750 18,234 5,000 ----- ---- ---- 9,423
_________________________
/1/ This amount reflects 3 components:
(a) $5,970 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary based formula for all employees.
(b) $3,133 for the employer matching contributions on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $5,439 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/2/ This amount reflects 3 components:
(a) $4,760 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $2,772 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $4,562 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/3/ This amount reflects 3 components:
(a) $8,106 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $2,136 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $4,659 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/4/ This amount reflects 3 components:
(a) $3,211 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $2,845 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $3,438 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
9
OPTION/SAR GRANTS TABLE
During 1995, the Company granted options pursuant to the Company's 1988
Stock Option Plan. The Table below shows the relevant information pertaining to
that grant of options.
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Potential
Realizable Value
at Assumed Annual
Individual Grants Rates of Stock Price
for Option Term
- - -----------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of
Total
Options/
SARs Exercise
SARs Employees or Base Expira-
Granted in Fiscal Price tion
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
---- ------- --------- -------- ------- ------ -------
Richard D. 17,800 100% 12.675 7/27/05 141,154 358,136
Callahan
CEO
James H. 7,000 100% 12.675 7/27/05 55,510 140,840
Paul
COO
Richard J. 7,200 100% 12.675 7/27/05 57,096 144,864
Notebaert Jr.
Vice President
Marianne R. 6,200 100% 12.675 7/27/05 49,166 124,744
O'Connor
CFO
10
AGGREGATED OPTION/SAR EXERCISES AND VALUES
The Table below shows for all officers named in the Summary Compensation Table
above the total number of options exercised during 1995 and unexercised options
held as of December 31, 1995.
Aggregated Option/SAR Exercises in Last Fiscal Year
---------------------------------------------------
and FY-End Option/SAR Values
----------------------------
(a) (b) (c) (d) (e)
Value
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercised
---- --------------- ------------------ --------------- ---------------
Richard D. 0 0 30,000 126,000
Callahan exercisable exercisable
17,800 2,503
unexcercisable unexcercisable
James H. 0 0 7,000 2,625
Paul unexcercisable unexcercisable
Richard J. 0 0 7,200 2,700
Notebaert, Jr. unexercisable unexcercisable
Marianne R. 0 0 2,000 17,000
O'Connor exercisable exercisable
6,200 2,325
unexercisable unexcercisable
EMPLOYMENT CONTRACTS
The Company is a party to an employment agreement with the named executive
officers shown in the Summary Compensation Table above and officers who do not
appear in the Table. Compensation under these agreements remains a primary
obligation of the subsidiary for whom the named executive also serves in an
executive capacity. The Company may in the future agree to become the primary
obligor if the employee's duties for the Company are expanded sufficiently to
warrant a change in the primary compensation obligation.
Mr. Notebaert has an employment agreement with the Company, as Vice President,
and The Homestead Savings (FA), for which he serves as President and Chief
Executive Officer. Mr. Notebaert's agreement provided for 1995 annual
compensation in the amount of $105,000, subject to further review and increase
annually until expiration in 1999. Mr. Notebaert's contract, contains a
severance provision that allows for the greater of two years then current salary
or current salary for the remainder of the five-year renewal period up to a
maximum of three years and applies only to termination by the Company or its
Subsidiary without cause. Mr. Notebaert is the only executive officer with
severance provisions in the employment agreement because it was entered into
prior to a change of Board policy eliminating such provisions. All other
executive officers entered into new employment agreements at a later date.
11
Mr. Callahan's employment agreement with the Company and Cayuga Savings Bank
fixed annual base compensation for 1995 in the amount of $181,000, subject to
further annual review and increase during a five-year term that expires in 1999.
The Company also has employment agreements with its other executive officers,
including those named in the Summary Compensation Table above. Ms. O'Connor's
employment agreement with the Company and Cayuga Savings Bank, where she also
serves as Treasurer and Chief Financial Officer, provided for 1995 annual
compensation in the amount of $91,000 subject to further annual review and
increase during a five-year term that expires in 1999. Mr. Paul's employment
agreement provided for 1995 annual compensation in the amount of $102,000,
subject to further annual review and increase during the five-year term that
expires in 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Joseph P. Ganey, chairman of the Board of Directors of the Company and a
member of its Compensation Committee, served as acting president and chief
executive officer from the time that office became vacant upon the resignation
of Robert J. Steigerwald in November, 1993 through May, 1994, when Richard D.
Callahan was appointed. Mr. Ganey also served as president and chief executive
officer of Cayuga Savings Bank, as predecessor to the Company from 1976 through
1988, when he retired from active employment.
REPORT ON EXECUTIVE COMPENSATION
The Company's executive officers, each of whom serves in an executive capacity
at one of the Company's operating subsidiaries, continued to be compensated
during 1995 directly from the subsidiary as primary employer.
The members of the Company's Nominating/Personnel Committee, except for Mr.
Callahan, which establishes and monitors all compensation policies and programs,
serve as the Compensation Committee responsible for the final determination of
compensation to Iroquois executive officers. The Committee reviewed the
compensation fixed by the applicable subsidiary practices established as the
core of its compensation policy.
OVERALL COMPENSATION POLICY
During 1995, the Company worked with an independent consultant to develop an
effective executive compensation strategy and to assess its market
competitiveness to assure consistency with the goals of competitive pay
practices. The strategy was adopted as the tool for achieving the Company's
overall goal of improving shareholder value with a philosophy of maintaining
high quality community banking services through a dedicated and competent staff.
The underlying compensation policy is intended to reflect the rationale that the
chief executive officer (CEO) and other executive officers should, as all
employees, have appropriate financial rewards and incentives to encourage long
term commitment and high quality performance. The compensation policy also
serves as guidance in developing specific company-wide procedures and programs
that do not vary significantly for the different entities within the Iroquois
family. The following executive compensation strategy was designed to further
the Company's key business objectives and incorporate consideration of current
market data relating to compensation levels for executives at comparable
companies. The strategy relies on four elements of compensation:
12
. Base salary levels that are targeted below the relevant comparable market
to emphasize the pay for performance strategy and to preserve effective
management of fixed costs.
. Annual incentive compensation that offers awards above market for executive
performance that exceeds quantitative measures of financial and operational
results.
. Equity compensation to align executives' interests with shareholder values.
. Benefits tied to market for comparable positions in comparable companies in
the same industry group.
These four elements are structured to work together for an effective strategy
that has the following characteristics:
. Balanced reinforcement of decision making for short term and long term
corporate objectives.
. Total executive compensation within the range for the same industry
category and for comparably sized companies to ensure compensation remains
comparable and competitive for the relevant market.
This strategy should provide total compensation for executives that will
attract, retain, and motivate executives and that will promote positive results
for shareholders. For each element of total compensation, the following
sections summarize the analysis and recommendations of the Committee for
executive compensation during 1995.
BASE SALARY
EXECUTIVE OFFICERS COMPENSATION. Base salaries for executive officers were
established by the chief executive officer in conjunction with the established
performance-based compensation philosophy and market information provided by the
Company's independent consultant. The Committee reviewed the analysis and
recommendations of the CEO and determined they were consistent with the base
salary element of the Company's overall strategy. The determination of base
salary began with information from the Company's independent consultant on the
ranges of salaries for executive officers at companies of similar size in the
same industry group. In accordance with the Company's compensation strategy,
the market ranges were then reduced by 10% to establish a below market base
salary range for executive officers. Each individual executive officer was then
evaluated based upon performance and experience and base salary compensation was
awarded within the established range.
CEO COMPENSATION. Mr. Callahan's base salary was determined directly by the
Committee based upon the same criteria and using the same process as for all
executive officers described above. A base salary range was derived from market
information on chief executive officer salaries at companies within the
financial services industry and of similar asset size to Iroquois and his salary
was then fixed within that range taking into consideration both experience and
performance.
13
ANNUAL INCENTIVE COMPENSATION
EXECUTIVE OFFICERS COMPENSATION. Annual incentive compensation played a
critical role as intended in the Company's compensation strategy because it was
used to reward executives upon the achievement of key operating and financial
results. Incentive compensation is used to reinforce the pay for performance
goal and place a portion of the executive's compensation for the year at risk if
either Company or individual performance goals are not achieved. The Company's
1995 Management Incentive Plan rewarded executives for the achievement of both
subsidiary bank and individual performance goals, where the weight allocated
between the performance achieved for those two components varied, with greater
weight attached to overall bank performance (defined in terms of pre-tax net
income). Under the Plan, the executives were awarded for performance within a
range of 16% to 27 % of base salary based on the achievement of the established
performance goals.
CEO COMPENSATION. Annual incentive compensation was awarded to the chief
executive officer during 1995 under the Company's 1995 Management Incentive Plan
described above based upon his individual performance and the performance of
Cayuga Savings Bank, for which he serves as chief executive officer. The
Committee determined that no additional incentive compensation was necessary for
holding company responsibilities independent of the subsidiary, which comprises
the Company's primary asset and operations. This determination is in accordance
with the Company's compensation philosophy that compensation be paid and primary
performance be measured at the operating subsidiary level until the complexion
of the holding company warrants a change. In addition, chief executive officer
performance for the Company's other subsidiary was recognized in the incentive
compensation awarded to Mr. Notebaert, who serves as chief executive of The
Homestead Savings and an executive officer of the Company.
Targeted incentive award percentages under the Management Incentive Plan were
established based on market information provided by the Company's independent
consultant for companies of similar size and in the same industry group. Award
levels were established at a market level for 1995.
EQUITY BASED INCENTIVE COMPENSATION
Long term goals are used to provide balance to the short term pay for
performance strategy achieved through annual incentive compensation. Long term
goals of increased shareholder value are reinforced with equity based
compensation, to align executives' interests more closely with those of the
shareholders. Awards in 1995 were limited because of relatively few shares
available under the existing 1988 Stock Option Plan, in contemplation of a
review of the Company's incentive compensation programs and adoption of a new
plan (see Proposal to Approve 1996 Stock Option Plan at page 18 of this proxy
statement). The options were awarded to the top three tiers of management
defined in the Company's Management Incentive Plan described above; the
Company's executive officers are included in the top two tiers of that Plan.
The allocation was made by using a market-based multiple derived from
information on long term incentive grants for peer companies in the same
industry group as provided by the Company's independent consultant.
IROQUOIS BANCORP, INC.
COMPENSATION COMMITTEE
John Bisgrove, Jr.,Chairperson
Russel C. Fielding
Joseph P. Ganey
William J. Humes
Lewis E. Springer, II
14
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return on its common stock to (a) the cumulative
return of the Nastaq Stock Market (National Market - US Companies) index and to
(b) the cumulative return Bank Stocks index. The graph and tabular explanation
of the graph assume that $100 was invested on December 31, 1990 in each of
Iroquois common stock, the Nasdaq Stock Market (National Market - US Companies)
Index and the Nasdaq Stock Market Bank Stocks Index, and that all dividends were
reinvested. The data was furnished by the Center for Research in Security
Prices (CRSP).
Graphical Representation of the following data:
- - --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
- - --------------------------------------------------------------------------------
Iroquois Bancorp,
Inc. $100.0 126.4 203.5 300.7 299.5 494.8
- - --------------------------------------------------------------------------------
Nasdaq Stock
Market (National Market -
US Companies) $100.0 160.6 186.9 214.5 209.7 296
- - --------------------------------------------------------------------------------
Nasdaq Bank
Stocks $100.0 164.1 238.9 272.4 271.4 404.4
- - --------------------------------------------------------------------------------
15
CERTAIN TRANSACTIONS
From time to time, Cayuga Savings Bank and The Homestead Savings (FA) make
loans to their directors and officers and those of the Company, as well as to
other companies and businesses with which directors of the Company and its
subsidiaries may be affiliated. Included are loans that may be secured by a
mortgage on the officer's or director's primary residence. All loans to
directors and executive officers and to any affiliated business are specifically
approved in writing by the lending institution's Board of Directors, and are
made on substantially the same terms, including interest rates and collateral,
as those for comparable transactions with other persons prevailing at the time,
and do not involve more than the normal risk of collectability or present other
unfavorable features.
------------------------------------------------------------
PROPOSAL TO AMEND THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION
Shareholders will be asked at the Annual Meeting to consider and vote upon a
proposal to amend the Company's Restated Certificate of Incorporation increasing
the number of shares of authorized common stock, $1.00 par value, from 3,000,000
to 6,000,000. Such amendment was determined advisible and unanimously approved
by the Board of Directors of the Company on January 25, 1996.
The Company's Restated Certificate of Incorporation currently authorizes the
issuance of 6,000,000 shares of capital stock, composed of 3,000,000 shares of
common stock and 3,000,000 shares of serial preferred stock. The proposed
amendment would increase the Company's total authorized capital stock by
3,000,000 shares, from 6,000,000 to 9,000,000 shares. If the amendment is
authorized, the text of article 4 and 4.A would be amended to read as follows:
"4. Stock. The authorized capital stock of this Corporation shall
-----
consist of Nine Million (9,000,000) shares of common and serial preferred
stock, which shall be classified as follows:
A. Six Million (6,000,000) shares of the capital stock shall
be designated as shares of the common stock, par value One
Dollar ($1.00) per share."
At February 1, 1996, there were 2,340,242 issued and outstanding shares of the
Company's common stock and an additional 96,000 shares of common stock
authorized and unissued, but reserved for issuance under the Company's Amended
and Restated 1988 Stock Option Plan. In addition, as described in proposal 3 of
this proxy statement, the Board of Directors has approved the 1996 Stock Option
Plan which, if approved, will require an additional 230,000 shares of the
Company's common stock be reserved for issuance under that plan.
In August, 1995, the Company issued 1,148,260 shares of common stock as the
result of a two-for-one stock split effected in the form of a stock dividend,
which reduced the number of shares available for issuance. The Board of
Directors has determined that the number of authorized shares of common stock
should be increased to provide the Company with sufficient available shares to
provide the Company with the flexibility to conduct the Company's future
operations, including the issuance, distribution, exchange, or reservation of
shares of common stock for stock dividends, acquisitions, financings, and
employee equity compensation programs as may become desirable from time to time,
including the 1996 Stock Option Plan described in proposal 3 of this proxy
statement.
16
The Board of Directors currently has no specific plans to issue additional
common stock except as provided in the Company's existing Amended and Restated
1988 Stock Option Plan, the proposed 1996 Stock Option Plan, and the Company's
automatic Dividend Reinvestment Plan.
Holders of the Company's common stock do not have preemptive rights to
subscribe to additional securities that will be issued by the Company under such
plans and programs, which means that current shareholders do not have any prior
right to purchase any of the newly authorized common stock in order to maintain
a proportionate ownership interest. All shareholders, who wish to maintain
their interests in light of any further issuances of common stock under
compensation programs, however, are able to do so through normal market
purchases.
VOTE REQUIRED
Approval of the proposed amendment of the Company's Restated Certificate of
Incorporation requires the affirmative vote of the holders of a majority of the
shares of Common stock issued and outstanding and eligible to vote.
Accordingly, abstentions will have the same effect as a vote against the
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION. Proxies
solicited by management will be voted for this proposal unless a vote against
this proposal or abstention is specifically indicated on the proxy card.
------------------------------------------------------------
PROPOSAL TO APPROVE THE COMPANY'S 1996 STOCK OPTION PLAN
For ten years the Company has provided stock options as an incentive to its
executives and key employees responsible for the growth and profitability of the
Company. Management believes stock options play a major role in attracting and
retaining highly qualified executives and key personnel upon whose judgment,
skill, and initiative the Company's success largely depends. In addition, stock
options have come to be considered a competitive necessity because of their
widespread use in the banking industry.
On January 25, 1996, the Company's Board of Directors, subject to shareholder
approval, adopted the 1996 Stock Option Plan ( the "Plan") recognizing that all
available options under the Company's Amended and Restated 1988 Stock Option
Plan have been granted. Unexercised options under the 1988 Stock Option Plan
will remain in effect according to their terms and approval of the 1996 Stock
Option Plan will enable the Company to continue to utilize this tool that
management has determined to be an essential component of its compensation
strategy as described in more detail in the compensation committee report at
page 13 of this proxy statement.
The 1996 Stock Option Plan is intended to emphasize the Company's performance
based compensation philosophy and encourage stock ownership by the Company's
officers and key employees. The Plan will be administered by a stock option
committee pursuant to guidelines for awards that are tied to achievement of
performance goals by eligible officers and key employees. Options will
generally be granted on an annual basis to executive officers and key employees
of the Company and its subsidiaries if the Company's performance meets certain
goals. Awards are based on an amount calculated by utilizing a market multiple
that increases as the Company's return on equity increases from 80% up to a
maximum of 120% of the target for the year. No options are granted if the
return on equity is less than 80% of the performance goal and awards do not
increase for performance above 120% of the target. The multiples are set
according to the level of employment responsibility, with higher multiples for
higher
17
level executives. The specific number of options granted is determined by
applying the applicable multiple based on the return on equity for the
employee's category to the employee's current base salary and dividing by the
current market price of one share of Company common stock.
The following is a brief description of certain key provisions of the Plan.
It is intended only as a summary and is qualified by reference to the entire
1996 Stock Option Plan, which is attached hereto as Exhibit A.
DESCRIPTION OF THE PLAN
Under the terms of the Plan, up to 230,000 shares of common stock are subject
to the grant of options. It is intended that the options granted under the Plan
may constitute either incentive stock options as described below ("Incentive
Options"), or options that do not so qualify ("Non-Qualified Options"). The
Plan will be administered by a stock option committee designated by the Board of
Directors (the "Committee"). Under the plan, the Committee is given discretion
to select the employees to whom options are granted, the option price, the
number of shares subject to each option, and the time or times at which each
option may be exercised, including whether an option may be exercised in whole
or in installments. It is anticipated, however, that except under special
circumstances the Committee will make such determinations in accordance with the
Company's compensation policies and guidelines described above.
Officers and other key employees of the Company and its subsidiaries are
eligible to receive options to purchase shares of the Company's common stock.
No options may be granted after five (5) years from the date of the Plan's
original approval in January, 1996. The option price for shares purchased upon
the exercise of options is not less than 100% of the fair market value of the
shares on the date of grant and no option is exercisable after the expiration of
ten years from the date of grant. On March 1, 1996, the closing sale price of
the Company's common stock was $13.50. Generally, an employee may exercise an
option only while employed by the Company or a subsidiary or within thirty days
of termination of employment, ninety days after retirement or disability, or two
years after death. An optionee cannot transfer or assign an option other than by
will or in accordance with the laws of descent and distribution.
The Plan may be amended without a vote of the shareholders except to the
extent that such amendment would increase the number of shares available, amend
provisions relating to administration or eligibility, change the price
computation or decrease any option price, increase the maximum term of any
option or materially increase any benefits under the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), no federal income tax consequences are incurred by the Company or the
optionee at the time an Incentive Option is granted or exercised, except that
the difference between the option price and the value of the stock on the date
of exercise is an item of tax preferences for purposes of the alternative
minimum tax as applied to the optionee. When and if the stock received upon
exercise of an Incentive Option is sold in a qualified disposition (a
disposition at least two years after the issuance of an option and one year
after the exercise of the option), the optionee will realize gain or loss equal
to the difference between the selling price of the stock and the price paid for
the stock. In the event of a disqualifying disposition of stock received upon
the exercise of an Incentive Option, the excess of the fair market value of the
stock on the exercise date (or, if less, on the date of the disqualifying
disposition) over the option price will constitute ordinary income to the
optionee in the year of the disposition, and a corresponding deduction will be
available to the Company.
18
With respect to Non-Qualified Options, no federal income tax consequences are
incurred by the Company or the optionee at the time the option is granted. At
the time of exercise, the optionee will recognize ordinary income in an amount
equal to the difference between the option price and the value of the stock on
the date of exercise and the Company will be entitled to a corresponding
deduction for federal income tax purposes in an equal amount upon compliance
with any requisite income tax withholding provisions. Upon the sale of stock
received upon exercise of such an option, the optionee will realize gain or loss
equal to the difference between the selling price of the stock received upon
exercise of a Non-Qualified Option, the optionee will recognize gain or loss
equal to the difference between the selling price of the stock in its fair
market value on the date of exercise.
VOTE REQUIRED
Approval of the proposed 1996 Stock Option Plan requires the affirmative vote
of a majority of the issued and outstanding shares of the common stock of the
Company eligible to vote at the Annual Meeting. Accordingly, abstentions will
have the same effect as a vote against the proposal. Broker "non-votes" will
also have the same effect as a negative vote because brokers are not permitted
to vote on this nondiscretionary matter.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSED PLAN. Proxies solicited will be voted for this proposal unless
Shareholders vote against this proposal or abstention is specifically indicated
on the proxy card.
------------------------------------------------------------
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP to
serve as independent auditors of the Company for the fiscal year ending December
31, 1996, subject to ratification of such appointment by the shareholders of the
Company. KPMG Peat Marwick LLP, and its predecessors, have served as auditors
of Cayuga Savings Bank and the Company for more than 22 years. Representatives
of KPMG Peat Marwick LLP will be present at the Annual Meeting of Shareholders
and will have the opportunity to make a statement, if they so desire, and will
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1996.
------------------------------------------------------------
19
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
All proposals of shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company at the address on the
cover of this proxy statement no later than December 2, 1996 in order to be
included in the proxy statement and form of proxy for the 1997 Annual Meeting.
All such proposals shall be subject to the requirements of the Securities and
Exchange Commission adopted under the Securities Act of 1934, as amended.
OTHER MATTERS
As of this date, the Board of Directors does not know of any business to be
brought before the Annual Meeting other than as specified above. If any other
matters properly come before the Meeting, however, it is the intention of the
persons named in the enclosed proxy to vote such proxy in accordance with their
judgment on such matters.
A copy of the Annual Report to Shareholders of the Company containing
consolidated financial statements prepared in conformity with generally accepted
accounting principles for the year ended December 31, 1995 accompany this proxy
statement being mailed to shareholders and is incorporated by reference, and
made a part of this proxy statement. Additional copies of the Annual Report to
Shareholders may be obtained without charge from the Secretary of the Company,
115 Genesee Street, Auburn, New York 13021.
By Order of the Board of Directors
James H. Paul, Secretary
Auburn, New York
April 1, 1996
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY RECORD HOLDER OR BENEFICIAL
OWNER OF ITS COMMON STOCK AT ANY TIME AFTER MARCH 30, 1996 A COPY OF THE
COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K.
WRITTEN REQUESTS SHOULD BE DIRECTED TO IROQUOIS BANCORP, INC., TO THE ATTENTION
OF JAMES H. PAUL, 115 GENESEE STREET, AUBURN, NEW YORK 13021.
20
APPENDIX A
IROQUOIS BANCORP, INC.
1996 STOCK OPTION PLAN
1. INTRODUCTION AND STATEMENT OF PURPOSE
This 1996 Stock Option Plan (the "Plan") is intended to encourage stock
ownership by selected officers and employees of Iroquois Bancorp, Inc. (the
"Company"), a New York corporation registered as a state bank holding company
under the New York State Banking Law and as a federal thrift holding company
under the Home Owners' Loan Act of 1933, as amended, and to selected officers
and employees of the Company's subsidiaries, Cayuga Savings Bank, a New York
State chartered savings bank, The Homestead Savings (FA), a federally chartered
savings association and such other entities as may become a subsidiary of the
Company while this Plan remains in effect (collectively, the "Subsidiaries" and
individually, a "Subsidiary"). The Plan is designed to promote the Company's
interests by increasing the proprietary interest in the Company of officers and
key employees of the Company and Subsidiaries on whose judgment and performance
the success of the Company largely depends. The Plan is also designed to
attract and retain persons of experience and ability to serve as officers and
employees of the Company and Subsidiaries.
Options granted under this Plan may be either Incentive Stock Options (as
hereinafter defined and provided for in Section 5(a) of this Plan) or
Nonstatutory Stock Options (as hereinafter defined and provided for in Section
5(b) of this Plan), as shall be determined in each specific case by a duly
appointed committee of the Board of Directors of the Company (the "Committee")
as hereinafter provided. As used in this Plan, the term "Option" shall refer to
either Incentive Stock Options or Nonstatutory Stock Options, or both.
2. ADMINISTRATION
(a) Subject to the express provisions of this Plan, the Committee shall
have plenary authority, in its sole discretion:
(i) To determine the time or times at which, and the officers and employees
of the Company and Subsidiaries to whom options shall be granted under this
Plan;
(ii) To determine, as the case may be, the Incentive Stock Option Price or
Nonstatutory Stock Option Price (both as defined herein) of, and the number of
shares of Stock (as defined herein) to be covered by, options granted under this
Plan;
(iii) To determine the time or times at which each option granted under
this Plan may be exercised, including whether an option may be exercised in
whole or in installments;
(iv) To interpret this Plan and to prescribe, amend and rescind rules and
regulations relating to it; and
(v) To make all other determinations which the Committee shall deem
necessary or advisable for the administration of this Plan.
(b) The membership of the Committee shall at all times consist of not less
than 2 members of the Board of Directors of the Company (the "Board of
Directors"), each of whom shall be a "Disinterested Person" as defined in
Section 2(d) hereinafter. The Committee shall have all of the powers and duties
set forth herein, as well as such additional powers and duties as the Board of
Directors may delegate to it; provided, however, that the Board of Directors
expressly retains the right (i) to appoint the members of the Committee, and
(ii) to terminate or amend this Plan consistent with provisions of applicable
law. The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed,
may fill vacancies in the Committee, however caused, and may discharge the
Committee. Duly authorized actions of the Committee shall constitute actions of
the Board of Directors for the purposes of this Plan and the administration
thereof.
(c) Notwithstanding anything herein to the contrary, no employee, officer
or director of the Company shall, as a member of the Committee or otherwise,
have any vote with regard to the grant of any option to such employee, officer
or director, including, but not limited to:
\ (i) The time at which any such option shall be granted;
(ii) The number of shares of Stock covered by any such option;
(iii) The time or times at which, or the period during which, any such
option may be exercised or whether it may be exercised in whole or in
installments;
(iv) The provisions of the agreement relating to any such option; and
A - 1
(v) The Incentive Stock Option Price of Stock subject to an Incentive Stock
Option granted to such person, or the Nonstatutory Stock Option Price of Stock
subject to a Nonstatutory Stock Option granted to such person.
(d) The term "Disinterested Person" as used in Section 2(b) of this Plan
shall mean a person who, at the time the person exercises discretion with
respect to the administration of this Plan, has not during the preceding year
received any discretionary grant of equity securities of the Company and
otherwise satisfies the qualifications of a "Disinterested Person" within the
meaning of the Securities and Exchange Commission's rules and regulations.
3. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 10 of this Plan, the maximum
number of shares which may be made subject to options, or which may be issued
upon the exercise of options granted under this Plan, shall be 230,000 shares
of the common stock of the Company (the "Stock"). The shares of Stock reserved
for issuance pursuant to this Plan shall consist of authorized but previously
unissued shares of Stock. Alternatively, the Committee may use Treasury shares
of Stock, in which case the number of authorized but unissued shares held in
reserve shall be reduced accordingly.
Except as otherwise provided in Section 10 of this Plan, if an option
granted under this Plan expires, terminates or is cancelled for any reason
without having been exercised in full, the shares of Stock allocable to the
unexercised portion of such option may again be made subject to an option or
options granted under this Plan.
4. ELIGIBILITY
Options may be granted under this Plan to such officers and regular full-
time employees of the Company and Subsidiaries as may be selected in the manner
provided in Section 2 of this Plan. A director of the Company or a Subsidiary
who is not also a regular full-time employee of the Company or a Subsidiary
shall not be eligible to receive any options under this Plan. A person granted
an option under this Plan shall nevertheless remain eligible to receive one or
more additional options thereafter, notwithstanding that options previously
granted to such person remain unexercised in whole or in part.
5. TERMS OF OPTIONS
This Plan is intended to authorize the Committee to grant, in its
discretion, options that qualify as incentive stock options pursuant to Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") (such
qualifying options being referred to herein as "Incentive Stock Options") or
options that do not so qualify (such nonqualifying options being referred to
herein as "Nonstatutory Stock Options"). Each option granted under this Plan
shall be evidenced by a written option agreement which shall be executed and
delivered as provided in Section 12 of this Plan and which shall specify whether
the option granted therein is an Incentive Stock Option or a Nonstatutory Stock
Option.
(a) Terms of Incentive Stock Options. Each stock option agreement
------------------------------------
covering an Incentive Stock Option granted under this Plan and any amendment
thereof shall conform to the provisions of Section 5(a)(i)-(iii) below, and may
contain such other terms and provisions consistent with the requirements of this
Plan as the Committee shall deem appropriate:
(i) Incentive Stock Option Price. Except as otherwise specifically
--------------------------------
provided in Section 8, the purchase price of each share of Stock subject to an
Incentive Stock Option (the "Incentive Stock Option Price") shall be a stated
price which is not less than 100% of the fair market value of such share of
Stock, determined in accordance with Section 8 of this Plan, as of the date such
Incentive Stock Option is granted; provided, however, that if an employee, at
the time an Incentive Stock Option is granted, owns stock representing more than
10% of the total combined voting power of all classes of stock of the Company,
(or, under Section 425(d) of the Code, is deemed to own stock representing more
than 10% of the total combined voting power of all such classes of stock,
directly or indirectly, by or for any brother, sister, spouse, ancestor, or
lineal descendant of such employee, or by or for any corporation, partnership,
estate or trust of which such employee is a shareholder, partner or
beneficiary), then the Incentive Stock Option Price of each share of Stock
subject to such Incentive Stock Option shall be at least equal to 110% of the
fair market value of such share of Stock, as determined in the manner stated
above.
(ii) Term of Incentive Stock Options. Incentive Stock Options granted
-------------------------------
under this Plan shall be exercisable for such periods as shall be determined by
the Committee at the time of grant of each such Incentive Stock Option, but in
no event shall an Incentive Stock Option be exercisable after the expiration of
10 years from the date of grant; provided, however, that an Incentive Stock
Option granted to any employee who owns or is deemed to own stock representing
more than 10% of the total combined voting power of all classes of Stock under
Section 425(d) of the Code pursuant to Section 5(a)(i) above, shall not be
exercisable after the expiration of 5 years from the date of grant. Each
Incentive Stock Option granted under this Plan shall also be subject to earlier
termination as provided in this Plan.
(iii) Exercise of Incentive Stock Options.
-----------------------------------
A - 2
(A) Subject to the provisions of Sections 5(a) (iii) (F) and 10 of this
Plan, Incentive Stock Options granted under this Plan may be exercised in whole
or in installments, to such extent, and at such time or times during the terms
thereof, as shall be determined by the Committee at the time of grant of each
such option.
(B) Incentive Stock Options granted under this Plan shall be exercisable
only by delivery to the Company of written notice of exercise, which notice
shall state the number of shares with respect to which such Incentive Stock
Option is exercised, the date of grant of the Incentive Stock Option, the
aggregate purchase price for the shares with respect to which the Incentive
Stock Option is exercised and the effective date of such exercise, which date
shall not be earlier than the date the notice is received by the Company nor
later than the date upon which such Incentive Stock Option expires. The
written notice of exercise shall be sent together with the full Incentive Stock
Option Price of the shares purchased, which must be paid in full in United
States dollars by cash, certified check, bank draft or money order payable to
the order of the Company.
(C) Except as expressly provided to the contrary in Section 9 of this Plan,
an Incentive Stock Option granted hereunder shall remain outstanding and shall
be exercisable only so long as the person to whom such Incentive Stock Option
was granted remains an officer or employee of the Company.
(b) Terms of Nonstatutory Stock Options. Each Stock Option agreement
-----------------------------------
covering a Nonstatutory Stock Option granted under this Plan and any amendment
thereof shall conform to the provisions of Section 5(b)(i)-(iii), below, and may
contain such other terms and provisions consistent with the requirements of this
Plan as the Committee shall deem appropriate:
(i) Nonstatutory Stock Option Price. Except as otherwise specifically
-------------------------------
provided in Section 8, the purchase price of each share of Stock subject to a
Nonstatutory Stock Option (the "Nonstatutory Stock Option Price") shall be a
stated price which is not less than 100% of the fair market value of such share
of Stock, determined in accordance with Section 8 of this Plan, as of the date
the Nonstatutory Stock Option is granted.
(ii) Term of Nonstatutory Stock Options. Nonstatutory Stock Options
granted under this Plan shall be exercisable for such periods as shall be
determined by the Committee at the time of grant of each such Nonstatutory Stock
Option, but in no event shall a Nonstatutory Stock Option be exercisable after
the expiration of 10 years from the date of grant. Each Nonstatutory Stock
Option granted under this Plan shall also be subject to earlier termination as
provided in this Plan.
(iii) Exercise of Nonstatutory Stock Options.
--------------------------------------
(A) Subject to the provisions of Sections 5(b)(iii)(E) and 10 of this
Plan, Nonstatutory Stock Options granted under this Plan may be exercised in
whole or in installments, to such extent, and at such time or times during the
terms thereof, as shall be determined by the Committee at the time of grant of
each such option.
(B) Nonstatutory Stock Options granted under this Plan shall be
exercisable only by delivery to the Company of written notice of exercise, which
notice shall state the number of shares with respect to which such Nonstatutory
Stock Option is exercised, the date of grant of the Nonstatutory Stock Option,
the aggregate purchase price for the shares with respect to which the
Nonstatutory Stock Option is exercised and the effective date of such exercise,
which date shall not be earlier than the date the notice is received by the
Company nor later than the date upon which such Nonstatutory Stock Option
expires. The written notice of exercise shall be sent together with the full
Nonstatutory Stock Option Price of the shares purchased, which must be paid in
full in United States dollars by cash, certified check, bank draft or money
order payable to the order of the Company.
(C) Except as expressly provided to the contrary in Section 9 of this
Plan, a Nonstatutory Stock Option granted hereunder shall remain outstanding and
shall be exercisable only so long as the person to whom such Nonstatutory Stock
Option was granted remains an officer or employee of the Company or a
Subsidiary.
6. LIMITATION ON GRANT OF INCENTIVE STOCK OPTIONS
The aggregate fair market value of the Company's Stock (determined under
Section 8 hereof at the time of the grant of any option) with respect to which
Incentive Stock Options are first exercisable by any person holding an option
during any calendar year (under all stock option plans of the Company) shall not
exceed $100,000.00.
7. RIGHTS OF OPTIONEES; TRANSFERABILITY
No holder of an option shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares of Stock subject to such
option unless and until the option shall have been exercised pursuant to the
terms thereof, the Company shall have issued and delivered to the holder of the
option certificates representing the shares of Stock as to which the option has
been exercised, and the name of the holder shall have been entered as a
shareholder of record on the books of the
A - 3
Company, or its transfer agent. Thereupon, such person shall have full voting
and other ownership rights with respect to such shares of Stock.
All Incentive Stock Options and Nonstatutory Stock Options granted under
this Plan shall be nontransferable, except by will or the laws of descent and
distribution, and shall be exercisable during the lifetime of the person to whom
granted only by such person (or such person's duly appointed, qualified, and
acting personal representative).
8. DETERMINATION OF FAIR MARKET VALUE
For the purposes of this Plan, the fair market value of a share of Stock of
the Company shall be, unless otherwise prescribed by the Code and Regulations
thereunder, the average of the closing sale prices of the Stock as traded on The
Nasdaq Stock Market and reported in Nasdaq National Market listings on each of
the 5 trading days prior to the date on which such determination is made.
9. RETIREMENT, TERMINATION OF EMPLOYMENT OR DEATH OF HOLDERS OF OPTIONS
(a) Retirement. If a person to whom an option has been granted under this
----------
Plan retires from employment with the Company and/or Subsidiary on the "Normal
Retirement Date" or as a result of "Disability" (both as defined for purposes of
the Iroquois Bancorp, Inc. Money Purchase Pension Plan as in effect on the date
of adoption of this Plan by the Board of Directors), such option shall continue
to be exercisable in whole or in part to the extent exercisable on the date of
retirement, and, to the extent not theretofore exercised, by the person to whom
granted (or such person's duly appointed, qualified, and acting personal
representative) in the manner set forth in Section 5 of this Plan, at any time
within the remaining term of such option unless otherwise determined by the
Committee at the time of grant, provided, however, that any Incentive Stock
Option must be exercised within 3 months of the Normal Retirement Date, or
within one year from the Termination date of employment caused by Disability.
(b) Termination of Employment. Except as otherwise provided in this
-------------------------
Section 9, if the employment of a person to whom an option has been granted
under this Plan is terminated for any reason, such option shall, to the extent
not theretofore exercised, continue to be exercisable to the same extent that it
was exercisable for a period of 30 days from the date of such termination of
employment, or for such other period as may be determined by the Committee at
the time of grant, whereupon it shall terminate and shall not thereafter be
exercisable; provided, however, that in the event of termination of employment
for cause involving dishonesty, malfeasance, misfeasance or the commission of
a criminal offense (with respect to which determination of the Committee shall
be final and conclusive), any such option shall terminate immediately upon such
termination of employment. No option granted under this Plan shall be affected
by any change of duties or position of the person to whom such option was
granted or by any temporary leave of absence granted to such person by the
Company.
(c) Death. Unless otherwise determined by the Committee at the time of
-----
grant, if a person to whom an Option has been granted under this Plan (the
"Grantee") dies prior to the expiration of the term of such option, such option
shall be exercisable by the estate of the Grantee, or by a person who acquired
the right to exercise such option by bequest or inheritance from the Grantee, at
any time within two years after the death of such person and prior to the date
upon which the term of such option expires, to the extent and in the manner
exercisable by the Grantee as of the date of death.
10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; CHANGES IN CONTROL
(a) If the outstanding shares of Stock of the Company as a whole are
increased, decreased, changed into, or exchanged for, a different number or kind
of shares or securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure, or
amendment to the articles of incorporation of the Company or otherwise, an
appropriate and proportionate adjustment, as determined by the Committee and
subject only to the approval of regulatory authorities having jurisdiction, if
any, shall be made to the number and kind of shares subject to this Plan, and to
the number, kind, and per share Incentive Stock Option Price or Nonstatutory
Stock Option Price (as the case may be) of shares subject to unexercised options
granted prior to any such change. Any such adjustment shall be made without a
change in the aggregate purchase price of the shares of Stock subject to the
unexercised portion of any option.
(b) Upon the effective date of the dissolution or liquidation of the
Company, or of a reorganization, merger or consolidation of the Company with one
or more other corporations in which the Company is not the surviving
corporation, or of the transfer of substantially all of the assets or the
transfer of all of the shares of the Company to another corporation (any such
transaction being referred to herein as a "Terminating Event"), this Plan and
any option theretofore granted hereunder shall terminate unless provision is
made in writing in connection with such Terminating Event for the continuance of
this Plan and for the assumption of options theretofore granted hereunder, or
the substitution for such options of new options
A - 4
covering the shares of the successor corporation, or a parent or subsidiary
thereof, with such appropriate adjustments as may be determined or approved by
the Committee (or the successor to the Company) to the number and kind of shares
subject to such substituted options and to the Incentive Stock Option Price or
Nonstatutory Stock Option Price (as the case may be), in which event this Plan
and the options theretofore granted or the new options substituted therefor,
shall continue in the manner and under the terms so provided, subject only to
the approval of the regulatory authorities having jurisdiction, if any, under
applicable law and regulation. Upon the occurrence of a Terminating Event in
which provision is not made for the continuance of this Plan and for the
assumption of options theretofore granted or the substitution for such options
of new options covering the shares of a successor corporation or a parent or
subsidiary thereof, each officer or employee to whom an option has been granted
under this Plan (or such person's personal representative, estate or any person
who acquired the right to exercise the option from such person by bequest or
inheritance) shall be entitled, prior to the effective date of any such
Terminating Event, (i) to exercise, in whole or in part, such person's rights
under any option granted to such person without regard to any restrictions on
exercise that would otherwise apply, or (ii) to surrender any such option to the
Company in exchange for receipt of cash equal to the difference between the
aggregate fair market value of the shares of Stock such person would have
received had the person exercised the option in full immediately prior to
consummation of such Terminating Event (determined as of the date of the
Terminating Event as provided in Section 8 hereof) and the applicable aggregate
Incentive Stock Option Price or Nonstatutory Stock Option Price, as the case may
be. To the extent that a person, pursuant to this Section 10(b), has a right to
exercise or surrender any option on account of a Terminating Event which such
person otherwise would not have had at that time, such person's exercise or
surrender of such option shall be contingent upon the consummation of such
Terminating Event.
(c) In connection with the grant of any option hereunder the Committee may,
in its sole discretion, provide the holder thereof with the right, following a
"change in control" of the Company (as such term is defined in Section 10(d)
hereinafter), and without regard to any restrictions on exercise that would
otherwise apply, to exercise such option or to surrender such option for a cash
payment equal to the difference between the aggregate fair market value of the
number of shares of Stock then subject to the option, as determined in
accordance with Section 8 of this Plan as of the date of such surrender, and the
aggregate Incentive Stock Option Price or Nonstatutory Stock Option Price
therefor, as the case may be. Any right granted hereunder shall expire one year
after receipt by the option holder of written notice from the Company that a
change in control has occurred.
(d) For the purposes of this Plan, a "change in control" of the Company
shall mean: (i) any "person," including a "group" as determined in accordance
with the Section 13(d) of the Securities Exchange Act of 1934 ( the "Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities; (ii) as a result of, or in connection
with, any tender offer or exchange offer, merger or other business combination
(a "Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company; (iii) the Company is merged or
consolidated with another corporation and as a result of the merger or
consolidation less than 80% of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the aggregate by the
former shareholders of the Company, other than (A) affiliates within the meaning
of the Exchange Act, or (B) any party to the merger or consolidation; (iv) a
tender offer or exchange offer is made and consummated for the ownership of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding voting securities; or (v) the Company
transfers substantially all of its assets to another corporation which is not
controlled by the Company.
11. EFFECTIVE DATE OF THE PLAN
This Plan shall become effective upon its adoption by the Board of
Directors; provided, however, that (i) approval by the affirmative votes of a
majority of the outstanding shares of common stock of the Company eligible to
vote thereon at a shareholder's meeting duly called and held under the
provisions of New York Law has been obtained within 12 months after the adoption
of this Plan by the Board of Directors; and (ii) the effectiveness of options
granted under this Plan prior to the date that such approval by the shareholders
is obtained shall also be subject to such approval.
12. MANNER OF GRANT OF OPTIONS
The granting of an option under this Plan shall be deemed to occur only
upon the date on which the Committee shall approve the grant of such option.
All options granted under this Plan shall be evidenced by a written agreement,
in such form as shall be determined by the Committee, signed by a representative
of the Committee and the recipient thereof.
A - 5
13. COMPLIANCE WITH LAW AND REGULATIONS
The obligation of the Company to sell and deliver any shares of Stock under
this Plan shall be subject to all applicable laws, rules and regulations, and
the obtaining of all approvals by governmental agencies deemed necessary or
appropriate by the Committee, and should the grant or exercise of any particular
option or options hereunder be found to be in contravention of any such laws,
rules or regulations, said options shall be void or voidable without affecting
any other options granted (or to be granted) hereunder. Except as otherwise
provided in Section 2 and Section 16 herein, the Committee may make such changes
in this Plan and include such terms in any option agreement as may be necessary
or appropriate, in the opinion of counsel to the Company, to comply with the
rules and regulations of any governmental authority or to obtain, for
officers and employees granted Incentive Stock Options, the tax benefits under
the applicable provisions of the Code and the regulations thereunder.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934, as amended ("1934 Act"), transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors under
the 1934 Act. To the extent any provision of this Plan or action by the
administrators of the Plan fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the administrators of the
Plan. Moreover, in the event the Plan does not include a provision required by
Rule 16b-3 to be stated herein, such provision (other than one relating to
eligibility requirements, or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan insofar as
participants subject to Section 16 are concerned.
14. TAX WITHHOLDING
The Company shall have the right, in its sole discretion, to deduct or
otherwise effect a withholding of any amount required by federal or state laws
to be withheld with respect to the grant, exercise or surrender of any option
or the sale of stock acquired upon the exercise of an Incentive Stock Option
granted hereunder in order for the Company to obtain a tax deduction otherwise
available as a consequence of such grant, exercise, surrender or sale, as the
case may be.
15. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board of Directors nor the
submission of this Plan to the shareholders of the Company for approval shall be
construed as having any impact on existing qualified or nonqualified
retirement, bonus or similar plans of the Company or as creating any limitations
on the power of the Board of Directors to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options or stock appreciation rights otherwise than under
this Plan, and such arrangements may be either applicable generally or only in
specific cases.
Any options granted under the Company's 1988 Stock Option Plan or Amended
and Restated 1988 Stock Option Plan (the "1988 Plan") shall remain in effect
subject to the terms of the 1988 Plan.
16. AMENDMENT
The Board of Directors at any time, and from time to time, may amend this
Plan, and except as provided in Sections 10 or 11 hereof, no amendment shall be
effective unless approved by the affirmative votes of the holders of a majority
of the outstanding shares of the Company's Voting Stock within 12 months after
the date of the adoption of such amendment, if such amendment would:
(a) Increase the number of shares of Stock which may be made subject to
options, or which may be issued upon the exercise of options granted under this
Plan;
(b) Change in substance the provisions of Section 2 hereof relating to
administration of this Plan, or of Section 4 hereof relating to eligibility to
participate in this Plan;
(c) Change the method of computing the Incentive Stock Option Price for
shares of Stock subject to Incentive Stock Options or the Nonstatutory Stock
Option Price for shares of Stock subject to Nonstatutory Stock Options or
decrease any option price;
(d) Increase the maximum term of any options provided for herein, or the
term of the Plan; or
(e) Materially increase the benefits accruing to participants under the
Plan.
Except as provided in Sections 11 and 13 hereof, rights and obligations
under any option granted before amendment of this Plan shall not be altered or
impaired by amendment of this Plan, except with the consent of the person to
whom the option was granted.
A - 6
17. TERMINATION OR SUSPENSION
The Board of Directors at any time may suspend or terminate this Plan.
This Plan, unless sooner terminated, shall terminate on the fifth anniversary of
its adoption by the Board of Directors or its approval by the shareholders of
the Company, whichever is earlier, but such termination shall not affect any
option theretofore granted. No option may be granted under this Plan while this
Plan is suspended or after it is terminated.
No rights or obligations under any option granted while this Plan is in
effect shall be altered or impaired by suspension or termination of this Plan,
except with the consent of the person to whom the option was granted. Any
option granted under this Plan may be terminated by agreement between the holder
thereof and the Company and, in lieu of the terminated option, a new option may
be granted with an Incentive Stock Option Price or a Nonstatutory Stock Option
Price, as the case may be, which may be higher or lower than the Incentive Stock
Option Price or Nonstatutory Stock Option Price, as the case may be, of the
terminated option.
18. CONTINUATION OF EMPLOYMENT
Nothing contained in this Plan (or in any written option agreement) shall
obligate the Company or any Subsidiary to continue for any period to employ an
officer or employee to whom an option has been granted, or interfere with the
right of the Company or Subsidiary to vary the terms of such person's employment
or reduce such person's compensation.
19. EXCULPATION AND INDEMNIFICATION
The Company shall indemnify and hold harmless the members of the Board of
Directors and the members of the Committee from and against any and all
liabilities, costs, and expense incurred by such persons as a result of any act,
or omission to act, in connection with the performance of such persons' duties,
responsibilities, and obligations under this Plan, other than such liabilities,
costs and expenses as may result from the negligence, gross negligence, bad
faith, willful misconduct, or criminal acts of such persons.
20. TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Plan.
A - 7
REVOCABLE APPENDIX B TO PROXY STATEMENT
PROXY
IROQUOIS BANCORP, INC.
COMMON STOCK
ANNUAL MEETING OF SHAREHOLDERS MAY 9, 1996
The undersigned holder of common stock of Iroquois Bancorp, Inc.
hereby appoints James H. Paul and Marianne R. O'Connor and each of them his/her
attorneys, agents and proxies to represent the undersigned and to vote and act
upon the shares of common stock standing in the name of the undersigned which
he/she would be entitled to vote if personally present, as specified below, at
the Annual Meeting of Shareholders to be held on Thursday, May 9, 1996 at 10:00
a.m. or at any adjournment thereof, with full power of substitution and
revocation.
BALLOT
1. ELECTION OF DIRECTORS FOR THREE YEAR TERMS EXPIRING IN 1999
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
Class of 1996: William J. Humes; Arthur A. Karpinski; Henry D. Morehouse
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
- - --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE COMPANY'S 1996 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO AMEND THE COMPANY RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE COMPANY'S AUTHORIZED SHARES OF COMMON STOCK FROM 3,000,000 TO
6,000,000.
4. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Signature on reverse side required)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE
OTHER SIDE OF THIS CARD. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR
PROPOSALS 1, 2, 3 AND 4.
Date:
Signed
(Name of shareholder should be signed exactly
as it appears to the left) Please mark, sign,
date and return this proxy card promptly in the
enclosed postpaid envelope. This will save your
Company the cost of a follow-up solicitation.
Do you plan to attend the meeting? ____ YES ____ NO