EMPLOYMENT AGREEMENT
This
AGREEMENT ("Agreement") is made as of June 1, 2008, by and between
The
Oneida Savings Bank (the "Bank"), a New York chartered savings bank,
Michael R.
Kallet, an individual
residing in Oneida,
New York, ("Executive") and Oneida
Financial Corp.
(the "Company"), a federally-chartered corporation and the
holding company of the Bank, as guarantor. The Bank and Company are
collectively
referred to as the "Employer".
WHEREAS, Executive
and the Board of
Directors of the Bank desire to enter
into an agreement
setting forth the terms and conditions of Executive's
employment and provide for the continued service of the Executive;
and
WHEREAS, the Bank
recognizes
the importance of Executive to the Bank's
operations, and
desires to assure the
continuity of its
management and enable
the Executive to devote his full attention to management
responsibilities
when
faced with a possible change in control of the Bank or the
Company.
NOW,
THEREFORE,
in consideration of the mutual promises and covenants
herein contained, it is hereby agreed as follows:
1.
Employment.
(a)
Term. The initial term of employment under this Agreement shall be
for
the period commencing
on the date hereof and ending on May 31, 2011. Not later
than six months prior to the expiration of this Agreement,
the parties agree
to
commence discussions
regarding a renewal of this Agreement. If the parties
cannot reach
agreement regarding the terms for a renewal agreement, this
Agreement shall
automatically
renew for a 12 month
period unless either party
provides written
notice of intent
not to renew at least
60 days prior to
the
expiration of this
Agreement.
The initial term and any renewal term are
collectively referred to herein as the "Employment Term."
(b)
Duties. The
Executive shall serve as President
and Chief Executive
Officer of the Bank and Company during the Employment Term and shall have such
responsibilities,
duties and authority as is customary for persons serving in
similar chief
executive officer positions and as may from time to time be
reasonably assigned by the respective Boards of the Employer. As
Chief Executive
Officer of the Company and the Bank, the Executive shall be responsible for
implementing the policies of the Board of Directors of the Company
and the Board
of Directors
of the Bank,
and shall report to such respective Boards, as
applicable. In such
capacity, Executive
agrees to discharge
his duties to the
best of his abilities
and to devote
substantially all of
his working time and
attention to the
performance
of his duties under
this Agreement.
During the
Employment Term,
there shall be no material decrease in the duties and
responsibilities of
the Executive
other than as provided
herein, unless the
parties otherwise
agree in writing.
During the Employment
Term, the Executive
shall not be required to relocate, without his consent, his place of
employment
to a location
more than 25 miles
away from the
Employer's
Oneida, New York
<PAGE>
location to perform his duties hereunder, except for reasonably required
travel
by the Executive on
the business of the
Employer. The
Executive may affiliate
with professional
associations, business
and civic organizations in support of
his role as President and Chief Executive Officer, provided that Executive's
involvement in such activities does not adversely affect the performance of his
duties on behalf of the Company or the Bank or the reputation of the Company or
Bank.
2. Compensation
and Benefits.
(a)
Base Salary. The
Executive shall initially be paid a base salary at an
annualized rate
of $310,000.00 (as may be adjusted from time to time in
accordance with this Agreement, "Base Salary"), payable in accordance with the
Employer's regular payroll practices for its employees.
On an annual basis,
the
Executive's Base
Salary shall be
reviewed by the Employer and may be increased
in the discretion of
the Board of Directors and Compensation Committee of the
Employer. In reviewing
the Executive's Base
Salary, the Board of
Directors of
the Employer
shall
consider
the Executive's performance, scope of
responsibility, and
such other matters as the Board of Directors or the
Compensation Committee
of the Board deems
appropriate. The Base
Salary of the
Executive shall not be decreased at any time during the current
Employment Term
from the amount
then in effect, unless the Executive otherwise agrees in
writing. The Executive
shall also be entitled
to receive fees for serving as a
director of the
Bank, except that Executive shall not be paid fees for
attendance at committee meetings.
(b)
Bonuses and Incentive Compensation. The Executive shall be eligible
to
participate in an equitable manner with all other employees of the Employer in
any bonus or other
incentive programs
(including
any stock option or equity
compensation plans) as
may be authorized,
declared and paid by the Boards of
Directors of the Employer. This provision shall not preclude the grant of
any
other bonus or
compensation to the
Executive as determined by the Board of
Directors of the Employer.
(c)
Benefit Plans.
The Executive
shall be eligible to
participate in any
employee pension
benefit plans (as that term is defined
under Section 3(2) of
the Employee
Retirement Income
Security Act of 1974,
as amended), group
life
insurance plans,
medical plans, dental plans, long-term disability plans, and
other fringe
benefit plans or programs maintained by the employer for the
benefit of its employees ("Benefit Plans"). The Executive's
participation in any
such benefit plans and programs (before or after termination) shall
be based on,
and subject
to satisfaction of, the eligibility requirements and other
conditions of such
plans and programs
notwithstanding any
provisions of this
Agreement. The
Executive shall be entitled to such supplemental benefits as
set
forth on the attached
Exhibit A to this
Agreement,
which may be amended
from
time-to-time upon the mutual agreement of Executive and
Employer.
(d)
Expenses. The
Executive is authorized to incur reasonable expenses in
the performance
of his duties hereunder, including the costs of business
entertainment, travel,
and attendance at meetings. The Employer shall reimburse
the Executive for all such expenses promptly upon periodic
presentation by
the
Executive of an itemized account of such expenses.
(e)
Other Benefits.
During the period of
employment, the
Executive shall
also be entitled to receive the following benefits:
<PAGE>
(i) Paid vacation in accordance with the Employer's Employee
Handbook;
(ii) Reasonable sick
leave consistent with
the Bank's policy in that
regard for other executive officers; and
(iii) Reimbursement of fees or dues (but not personal expenses) for
up
to two club
memberships of the
Executive at dining or
country clubs as may be
beneficial to the
Executive's role with
the Bank. The choice of clubs shall be
subject to review and
disapproval by the
Board of Directors of the Bank at any
time.
(iv)
Use of a Bank owned or leased vehicle of type commensurate with
the Executive's
duties and role with
the Bank as reviewed
and approved by the
Board of Directors.
(f)
Exclusivity of Salary and Benefits. Executive shall not be entitled
to
any payments or
benefits other than
those provided
under this
Agreement or
referred to in Exhibit A.
3.
Termination.
Prior to a Change of Control, the Executive's employment by the Employer
shall be subject to termination as follows:
(a)
Voluntary Termination.
The Executive may terminate this Agreement upon
not less than 60 days prior written notice delivered to the Employer,
in which
event the Executive shall be entitled only to the compensation and benefits the
Executive has earned or accrued through the date of termination. Employer may
appropriately adjust Executive's duties upon notice of such
termination.
(b)
Termination
Upon Death. This Agreement shall terminate upon the
Executive's death. In
the event this Agreement is terminated as a result of the
Executive's death, the
Employer shall continue payments of the Executive's Base
Salary and payments
related to Executive's
participation in the
Benefit Plans
which would
have otherwise been due for a period of 90 days following the
Executive's death to the Executive's estate or designated
beneficiaries.
(c)
Termination
Upon Disability. Termination of Executive's
employment
based on "Disability"
shall be construed to comply with Section 409A of the
Internal Revenue Code and shall be deemed to have occurred if: (i)
the Executive
is unable to engage in any substantial gainful activity by reason of any
medically determinable
physical or mental
impairment
that can be expected
to
result in death, or
last for a continuous
period of not less
than 12 months;
(ii) by reason of any medically determinable physical or mental
impairment that
can be expected to result in death, or last for a continuous
period of not less
than 12 months, the
Executive is receiving
income replacement
benefits for a
period of not less than three months under an accident and health
plan covering
employees of the Bank or the Company; or (iii) the Executive is
determined to be
totally disabled by the Social Security Administration.
<PAGE>
The
Employer may terminate this Agreement upon the Executive's
Disability.
Once the Executive is determined to be Disabled, the Executive
shall be entitled
to 100% of the Executive's Base Salary and continued non-taxable benefits under
the Benefit Plans for a period of 26 consecutive weeks immediately
following the
date on which the Executive is determined to be Disabled,
reduced by any
other
Employer-provided
benefits to which the
Executive may be entitled with respect
to such Disability
(including, but not
limited to, benefits provided under any
disability insurance policy or program, worker's compensation law, or any
other
benefit program or
arrangement).
Any payment of Base
Salary shall be made
in
accordance with the regular payroll practices of the Bank.
(d)
Termination
for Cause.
The Employer may
terminate the Executive's
employment for Cause by written notice to the Executive. For purposes of this
Agreement,
"Cause" shall
mean the Executive's (1) personal dishonesty,
incompetence, or
willful misconduct;
(2) breach of
fiduciary duty
involving
personal profit or intentional failure to perform material stated duties;
(3)
willful violation of any law, rule, or regulation (other than
traffic violations
or similar offenses);
(4) being a specific
subject of a final cease and desist
order from, written
agreement with, or other order or
supervisory
direction
from, any federal or state regulatory authority; or (5) conviction
or indictment
of Executive for a felony or any misdemeanor involving moral
turpitude, deceit,
dishonesty or fraud. In determining incompetence, the acts or
omissions shall be
measured against standards generally prevailing in the financial
institutions
industry; provided,
it shall be the burden
of the Employer to
establish the
alleged acts and
omissions and the prevailing nature of the standards the
Employer shall have alleged are violated by such acts and/or
omissions.
Notwithstanding any
other term or provision of this Agreement to the
contrary, if the
Executive's employment
is terminated for Cause, the Executive
shall forfeit all rights to payments and benefits otherwise
provided pursuant to
this Agreement;
provided, however,
that Base Salary shall
be paid through the
date of termination.
(e)
Termination Without
Cause. The Employer
may terminate the Executive's
employment for reasons other than Cause upon not less than 60 days
prior to when
written notice is delivered to the Executive, in which event the Employer
shall
(i) pay to the Executive within 30 days following the date of
termination a lump
sum payment equal to
(i) the unpaid Base Salary that would have been paid to or
earned by the
Executive pursuant to this Agreement, if the Executive had
remained employed
under the terms of this Agreement through the end of the
Employment Term, or
for a period of 6 months following the date of termination,
whichever period is longer; and (ii) a cash bonus payment equal to
the estimated
amount necessary for the Executive to use the after-tax
portion of said
payment
to pay the premiums
of the Executive's supplemental benefits as provided in
Exhibit A for a period of 18 months following the termination date.
In addition,
the Employer shall provide continued life insurance coverage and non-taxable
medical and dental
insurance coverage at substantially the same levels that
existed prior
to the termination for a period of 18 months following the
termination date. If
the Executive
terminates his employment with the Employer
during the Employment
Term for "Good Reason"
(defined in Section
4(d) below),
other than following a Change of Control, such termination shall be deemed to
have been a termination by the Employer of the Executive's employment without
Cause.
<PAGE>
Notwithstanding the foregoing, if Executive's employment ends
prior to May
31, 2011 for reasons other than Cause and under circumstances that entitled
the
Executive to payments
and benefits under paragraph 4(a) of this Agreement
(regarding a "Change of Control"), then amounts that may be payable
under this
paragraph 3(e) shall
be reduced by payments
made to Employee under
paragraph
4(a).
(f) Change of Control.
If the Executive's
employment by the Employer shall
cease for any reason other than Cause, death or disability of Executive, or
termination for Good
Reason by Executive within six months prior to, or 12
months following,
a Change of Control
that occurs during the Employment Term,
the provisions
of paragraph 4 below shall apply even
if the Employment
Term
under this Agreement has expired.
(g)
Resignation. Effective
upon the Executive's
termination of employment
for any reason,
the Executive hereby resigns from any and all of
