UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
| ¨ | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material under §240.14a-12 |
Generations Bancorp NY, Inc.
_______________________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_______________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ¨ | Fee paid previously with preliminary materials. |
| ¨ | Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a6(i)(1) and 0-11. |
|
![](https://content.edgar-online.com/edgar_conv_img/2022/04/14/0001104659-22-045886_tm22369d1_def14aimg003.jpg) |
GENERATIONS
BANCORP NY, INC. |
20 East Bayard Street
Seneca Falls, New York 13148
(315) 568-5855
April 14, 2022
Dear Stockholder:
Enclosed you will find the
proxy materials for the 2022 Annual Meeting of Stockholders of Generations Bancorp NY, Inc. scheduled to be held at our Corporate Headquarters
located at 20 East Bayard Street, Seneca Falls, New York at 1:00 p.m, Eastern time, on Thursday, May 19, 2022.
The Annual Meeting is being
held for the purpose of (1) electing three Directors, (2) ratifying the appointment of Bonadio & Co., LLP (“Bonadio”)
as our independent registered public accounting firm for the year ending December 31, 2022 and (3) the approval of the Generations Bancorp
NY, Inc. 2022 Equity Incentive Plan (the “Equity Incentive Plan”).
Our Board of Directors has
determined that the election of the nominees for Director, the ratification of Bonadio as our independent registered public accounting
firm for the year ending December 31, 2022 and the approval of the Equity Incentive Plan are in the best interests of the Company and
our stockholders. For the reasons set forth in the Proxy Statement, the Board of Directors unanimously recommends a vote “FOR”
the election of each of the nominees for Director, “FOR” the ratification of Bonadio as our independent registered public
accounting firm for the year ending December 31, 2022 and “FOR” approval of the Equity Incentive Plan.
On behalf of the Board of
Directors, we are asking that you complete the enclosed proxy card and mail it back to us in the envelope provided. Your vote is
important, regardless of the number of shares owned. Our Proxy Statement and the 2021 Annual Report are available at: www.generationsbancorpny.com/annual-meeting.
|
President and Chief Executive Officer |
GENERATIONS BANCORP NY,
INC.
20 East Bayard Street
Seneca Falls, New York 13148
(315) 568-5855
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 19, 2022
Notice is hereby given that
the 2022 Annual Meeting of Stockholders of Generations Bancorp NY, Inc. (“Generations Bancorp”) will be held at our Corporate
Headquarters located at 20 East Bayard Street, Seneca Falls, New York at 1:00 p.m., Eastern time, on Thursday, May 19, 2022.
A Proxy Card and Proxy Statement
for the annual meeting are enclosed. The annual meeting is for the purpose of considering and acting upon:
| 1. | the election of three Directors; |
| 2. | the ratification of the appointment of Bonadio & Co., LLP as independent registered public accounting
firm for the year ending December 31, 2022; |
| 3. | the approval of the Generations Bancorp 2022 Equity Incentive Plan; and |
such other matters as may properly come
before the annual meeting, or any adjournments thereof. The Board of Directors is not aware of any other business to come before the annual
meeting.
Any action may be taken on
the foregoing proposals at the annual meeting on the date specified above, or on the date or dates to which the annual meeting may be
adjourned. Stockholders of record at the close of business on March 31, 2022 are the stockholders entitled to vote at the annual meeting,
and any adjournments thereof.
EACH STOCKHOLDER, WHETHER
HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED. A PROXY MAY BE REVOKED BY FILING
WITH THE CORPORATE SECRETARY OF GENERATIONS BANCORP A WRITTEN REVOCATION OR A DULY EXECUTED PROXY CARD BEARING A LATER DATE. ANY STOCKHOLDER
PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING. HOWEVER,
IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER
IN ORDER TO VOTE IN PERSON AT THE ANNUAL MEETING. ATTENDANCE AT THE ANNUAL MEETING WILL NOT IN ITSELF CONSTITUTE REVOCATION OF YOUR PROXY.
|
By Order of the Board of Directors, |
Seneca Falls, New York
April 14, 2022
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL
SAVE THE EXPENSE OF FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS: THE PROXY STATEMENT, INCLUDING THE NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS, AND THE ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2021 ARE EACH AVAILABLE ON THE INTERNET AT
WWW.GENERATIONSBANCORPNY.COM/ANNUAL-MEETING.
PROXY STATEMENT
Generations Bancorp NY,
Inc.
20 East Bayard Street
Seneca Falls, New York 13148
(315) 568-5855
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, May 19, 2022
This Proxy Statement is furnished
in connection with the solicitation of proxies on behalf of the Board of Directors of Generations Bancorp NY, Inc. (“Generations
Bancorp”) to be used at the Annual Meeting of Stockholders, which will be held at our Corporate Headquarters located at 20 East
Bayard Street, Seneca Falls, New York on Thursday, May 19, 2022 at 1:00 p.m., Eastern time, and all adjournments of the annual meeting.
The accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement are first being mailed to stockholders on or about
April 14, 2022.
REVOCATION OF PROXIES
Stockholders who execute proxies
in the form solicited hereby retain the right to revoke them in the manner described below. Unless so revoked, the shares represented
by such proxies will be voted at the annual meeting and all adjournments thereof. Proxies solicited on behalf of the Board of Directors
of Generations Bancorp will be voted in accordance with the directions given thereon. Please sign and return your proxy card in the
postage paid envelope provided. Where no instructions are indicated on the proxy card, signed proxies will be voted “FOR”
the election of the nominees for Directors named herein, “FOR” the ratification of the appointment of Bonadio as our independent
registered public accounting firm for the year ending December 31, 2022 and “FOR” approval of the Generations Bancorp NY,
Inc. 2022 Equity Incentive Plan.
Proxies may be revoked by
sending written notice of revocation to the Corporate Secretary of Generations Bancorp at the address shown above, by filing a duly executed
proxy bearing a later date on the enclosed proxy card or by voting in person at the annual meeting. The presence at the annual meeting
of any stockholder who had given a proxy shall not revoke such proxy unless the stockholder delivers his or her ballot in person at the
annual meeting or delivers a written revocation to our Corporate Secretary prior to the voting of such proxy.
If you are a stockholder whose
shares are not registered in your name, you will need appropriate documentation from your record holder to vote in person at the annual
meeting.
SOLICITATION OF PROXIES; EXPENSES
We will pay the cost of this
proxy solicitation. Our Directors, executive officers and other employees may solicit proxies by mail, personally, by telephone, by press
release, by facsimile transmission or by other electronic means. No additional compensation will be paid to our Directors, executive officers
or employees for such services. We will reimburse brokerage firms and other custodians, nominees, and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial owners of our common stock. We have retained Alliance Advisors, LLC to assist
us in soliciting proxies, and have agreed to pay Alliance Advisors, LLC a fee of $6,000 plus reasonable expenses for these services.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Except as otherwise noted
below, holders of record of the Company’s shares of common stock, par value $0.01 per share, as of the close of business on March
31, 2022 are entitled to one vote for each share then held. As of March 31, 2022, there were 2,458,261 shares of common stock issued and
outstanding.
In accordance with the provisions
of the Company’s Articles of Incorporation, record holders of common stock who beneficially own in excess of 10% of the outstanding
shares of common stock (the “Limit”) are not entitled to any vote with respect to the shares held in excess of the Limit.
The Company’s Articles of Incorporation authorize the Board of Directors (i) to make all determinations necessary to implement and
apply the Limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit supply information to the Company to enable the Board of Directors to implement
and apply the Limit.
Quorum
The presence in person or
by proxy of holders of a majority of the total number of outstanding shares of common stock entitled to vote is necessary to constitute
a quorum at the annual meeting. Abstentions and broker non-votes will be counted for purposes of determining that a quorum is present.
In the event there are not sufficient votes for a quorum, or to approve or ratify any matter being presented at the time of the annual
meeting, the annual meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of Directors,
the proxy card being provided by the Board of Directors enables a stockholder: (i) to vote FOR ALL nominees; (ii) to WITHHOLD for ALL
nominees; or (iii) to vote FOR ALL EXCEPT one or more of the nominees. Directors are elected by a plurality of votes cast, without regard
to either broker non -votes or proxies as to which the authority to vote for the nominees being proposed is withheld. Plurality means
that individuals who receive the highest number of votes cast are elected, up to the maximum number of Directors to be elected at the
annual meeting.
As to the ratification of
the appointment of Bonadio as our independent registered public accounting firm for the year ending December 31, 2022, by checking the
appropriate box, a stockholder may: (i) vote FOR the ratification; (ii) vote AGAINST the ratification; or (iii) ABSTAIN from voting on
such ratification. The ratification of this matter shall be determined by a majority of the votes represented at the annual meeting and
entitled to vote on the matter. Broker non-votes will not affect the outcome of the vote, and abstentions will have the same effect as
votes against.
As to the approval of the
Generations Bancorp NY, Inc. 2022 Equity Incentive Plan, by checking the appropriate box, a stockholder may: (i) vote FOR the approval;
(ii) vote AGAINST the approval; or (iii) ABSTAIN from voting on such matter. The affirmative vote of a majority of the votes cast for
this proposal at the Annual Meeting is required to approve this proposal. For purposes of this proposal, broker
non-votes and abstentions will not be counted as votes cast and will have no effect on this proposal.
Participants in the Generations Bank Employee Stock Ownership Plan
and 401(k) Plan
If you participate in the
Generations Bank Employee Stock Ownership Plan (the “ESOP”) or the Generations Bank 401(k) Plan (the “401(k) Plan”),
you will receive a vote authorization form that reflects all shares you may direct the trustee to vote on your behalf under the plan.
Under the terms of the ESOP and the 401(k) Plan, the ESOP trustee and the 401(k) Plan trustee votes all shares held by the ESOP and the
401(k) Plan, but each ESOP and 401(k) Plan participant may direct the trustee how to vote the shares of common stock allocated to his
or her account. The ESOP trustee will vote all unallocated shares of Generations Bancorp common stock held by the ESOP and all allocated
shares for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions.
The deadline for returning your voting instruction cards for the ESOP or the 401(k) Plan is May 12, 2022.
Persons and groups who beneficially
own in excess of 5% of the shares of common stock are required to file certain reports with the Securities and Exchange Commission regarding
such ownership. The following table sets forth, as of March 31, 2022, the shares of common stock beneficially owned by our Directors and
executive officers, individually and as a group, and by each person who was known to us as the beneficial owner of more than 5% of the
outstanding shares of common stock. The mailing address for each of our Directors and executive officers is 20 East Bayard Street, Seneca
Falls, New York 13148.
Persons Owning Greater than 5% | |
Shares of Common Stock Beneficially Owned as of
the Record Date (1) | | |
Percent of Shares of Common Stock Outstanding | |
Stilwell Activist Fund, L.P. (3) | |
| 243,606 | (2) | |
| 9.9 | % |
Stilwell Activist Investments, L.P | |
| | | |
| | |
Stilwell Partners, L.P. | |
| | | |
| | |
Stilwell Value LLC | |
| | | |
| | |
Joseph Stilwell | |
| | | |
| | |
111 Broadway, 12th Floor | |
| | | |
| | |
New York, New York 10006 | |
| | | |
| | |
| |
| | | |
| | |
M3 Funds, LLC | |
| 240,268 | (3) | |
| 9.8 | % |
M3 Partners, LP | |
| | | |
| | |
M3F, Inc. | |
| | | |
| | |
Jason A. Stock | |
| | | |
| | |
William C. Waller | |
| | | |
| | |
10 Exchange Place, Suite 10 | |
| | | |
| | |
Salt Lake City, UT 84111 | |
| | | |
| | |
| |
| | | |
| | |
AllianceBernstein L.P. | |
| 196,665 | (4) | |
| 8.0 | % |
1345 Avenue of the Americas | |
| | | |
| | |
New York, NY 10105 | |
| | | |
| | |
| |
| | | |
| | |
Generations Bank | |
| 150,969 | | |
| 6.1 | % |
Employee Stock Ownership Plan | |
| | | |
| | |
20 E Bayard Street | |
| | | |
| | |
Seneca Falls, NY 13148 | |
| | | |
| | |
| |
| | | |
| | |
Directors | |
| | | |
| | |
Dr. Jose A. Acevedo | |
| 2,100 | | |
| * | |
Cynthia S. Aikman | |
| 4,328 | (5) | |
| * | |
Menzo D. Case | |
| 75,146 | (6) | |
| 3.1 | % |
James E. Gardner | |
| 2,998 | | |
| * | |
Bradford M. Jones | |
| 31,608 | (7) | |
| 1.3 | % |
Gerald Macaluso | |
| 998 | | |
| * | |
Dr. Frank J. Nicchi | |
| 8,023 | (8) | |
| * | |
Dr. August P. Sinicropi | |
| 17,569 | (9) | |
| * | |
Vincent P. Sinicropi | |
| 9,980 | (10) | |
| * | |
| |
| | | |
| | |
Executive Officers who are not Directors | |
| | | |
| | |
Anthony G. Cutrona | |
| 4,090 | (11) | |
| * | |
Angela M. Krezmer | |
| 600 | | |
| * | |
| |
| | | |
| | |
All Directors and executive
officers as a group (11 persons) | |
| 157,440 | | |
| 6.4 | % |
(1) |
In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of Generations Bancorp common stock if he has or shares voting
or investment power with respect to such common stock or has a right to acquire beneficial ownership at any time within 60 days from
March 31, 2022. As used herein, “voting power” is the power to vote or direct the voting
of shares and “investment power” is the power to dispose or direct the disposition of shares. Except as otherwise noted,
ownership is direct and the named individuals and group exercise sole voting and investment power over the shares of Generations Bancorp
common stock |
(2) | Based
on Schedule 13D filed jointly with the SEC on October 8, 2021 by Stilwell Activist Fund,
L.P., Stilwell Activist Investments, L.P., Stilwell Partners, LP, Stilwell Value LLC and
Joseph Stilwell. |
(3) | Based on an Amended Schedule 13G filed jointly with the SEC on February
14, 2022 by M3 Funds, LLC, M3 Partners, LP, M3F, INC., Jason A. Stock and William C. Waller. |
(4) | Based on Schedule 13G filed with the SEC on February 14, 2022 by AllianceBernstein
LP. |
(5) | Includes 1,828 shares held in the Directors Retirement Plan, (exclusive
of 2022 contribution). |
(6) | Includes 35,911 shares held in Mr. Case’s 401(k) account; 28,744 shares
held in Mr. Case’s supplemental executive retirement plan (exclusive of 2022 contribution); 1,546 shares held in Mr. Case’s
individual retirement account; 1,368 shares held jointly with other family members and 7,577 shares held in Mr. Case’s employee
stock ownership plan account. |
(7) | Includes 23,845 held in the Directors Retirement Plan, (exclusive of 2022
contribution). |
(8) | Includes 6,027 shares held in the Directors Retirement Plan, (exclusive
of 2022 contribution). |
(9) | Includes 14,219 shares held in Dr. Sinicropi’s individual retirement
account and 3,350 shares held in the Directors Retirement Plan; (exclusive of 2022 contribution). |
(10) | Shares held in Mr. Sinicropi’s individual retirement account. |
(11) | Includes 3,212 shares in Mr. Cutrona’s 401k account and 878 shares
in Mr. Cutrona’s employee stock ownership plan account. |
PROPOSAL I—ELECTION OF DIRECTORS
Our Board of Directors is
comprised of nine members. Our Bylaws provide that Directors are divided into three classes as nearly equal in number as possible, with
one class of Directors elected annually. Three Directors have been nominated for election at the annual meeting. The Board of Directors
has nominated Dr. Jose A. Acevedo, Cynthia S. Aikman and Menzo D. Case, each to serve as a Director for a three-year term ending in 2025
and in each case until their respective successors shall have been elected and qualified. All nominees have agreed to serve as a Director
if elected.
The following sets forth certain
information regarding the nominees, the other continuing members of our Board of Directors, and our executive officers who are not Directors,
including the terms of office of board members. It is intended that the proxies solicited on behalf of the Board of Directors (other than
proxies in which the vote is withheld as to any nominee) will be voted at the annual meeting for the election of the proposed nominees.
If a nominee is unable to serve, the shares represented by all such proxies will be voted for the election of such substitute as the Board
of Directors may determine. At this time, the Board of Directors knows of no reason why any of the nominees might be unable to serve,
if elected. Each of the nominees is as a current Board member. There are no arrangements or understandings between any nominee or continuing
Directors and any other person pursuant to which such nominee or continuing Directors was selected. Age information is as of March 31,
2022, and an individual’s service as a Director includes service with Generations Bank.
With respect to Directors
and nominees, the biographies contain information regarding the person’s business experience and the experiences, qualifications,
attributes or skills that caused the Board of Directors to determine that the person should serve as a Director.
Nominees
Menzo D. Case,
age 58, is our President and Chief Executive Officer, positions he has held since 2008. He serves as a board member of Finger Lakes Health
Systems, Inc., Northeast College of Health Sciences, the Rev Theater Company, the National Women’s Hall of Fame, the Women’s
Right to Run 19K, Inc., and serves as a board member who actively volunteers for Habitat for Humanity of Seneca County, New York, an organization
which has housed in excess of 115 Seneca County residents over his 20 plus years of service to the organization.
Mr. Case’s extensive
knowledge of the banking industry and strong leadership skills provides the board with invaluable insight and guidance into the business
and regulatory requirements of today’s banking environment.
Dr. Jose A. Acevedo,
age 58, is the President and Chief Executive Officer of Finger Lakes Health in Geneva and Finger Lakes Health College of Nursing &
Health Sciences, positions he has held since 2010. Dr. Acevedo joined Finger Lakes Health in 2004 as VP of Medical Affairs and Chief Medical
Officer. Dr. Acevedo is active in civic and community affairs through his participation in Geneva 2020 and is Chair-elect for the New
York State Healthcare Association. He is past-chair of Pandion, a Rochester, NY based group purchasing organization. Additionally, past
service includes the Independent Judicial Election Qualification Commission, Boys & Girls Club of Geneva Community Center Advisory
Council and the Salvation Army Advisory Board, as well as service on the board of Keuka College in Keuka Park, New York.
Dr. Acevedo’s contacts
in the local business and healthcare community and management experience make him a valuable resource for the Board of Directors.
Cynthia S. Aikman, MPA,
age 59, is self-employed as a Consulting Business Development Specialist. She has served as a Legislator for Cayuga County, New
York from 2009 to 2013 and as an instructor at Onondaga Community College. Ms. Aikman is also the Founder and Trustee of the Cayuga Women’s
Business Trust Fund.
Ms. Aikman’s contacts
in local business and government communities as well as her legislative experience make her a valuable resource for the Board of Directors.
Continuing Directors
Bradford M.
Jones, age 71, is retired. He has served as Chairman of the Board of Directors since 2018. Prior to his retirement in 2012, from
2008 until 2012, Mr. Jones was General Manager of Thruway Fasteners, Liverpool, New York, and from 1975 until 2007 served in positions
of increasing importance at ITT - Goulds Pumps, Auburn Operations (New York). Mr. Jones also served as Mayor for the Village of Seneca
Falls, New York from 1996 to 2000.
Mr. Jones’ contacts
in the local business and government communities and management experience make him a valuable resource for the Board of Directors.
James E. Gardner,
age 57, is the Vice President/Commercial Operations for The Barden & Robeson Corporation in Middleport, New York, where he has been
employed since 1992. Mr. Gardner was appointed to the board in 2018 in connection with our merger with Medina Savings and Loan Association.
He currently is involved with the Medina Lions Club and is a board member with his local Knights of Columbus and he frequently represents
Barden Building Systems at the Buffalo Niagara Builders Association events.
Mr. Gardner’s connections
to the local business community in Orleans County makes him a valuable resource for the Board of Directors.
Gerald Macaluso, age
70, is retired. Prior to his retirement in 2012, Mr. Macaluso was Principal at DeSales High School in Geneva, New York and, from 1998
until 2008, was Superintendent for Seneca Falls Central School District, New York. Mr. Macaluso is active in civic and cultural matters
in the community. He serves as treasurer for the Seneca Falls Education Foundation, is a member of the Seneca Falls Rotary Club, serves
as an Ombudsman for LifeSpan/Rochester and is a driver for Meals on Wheels/Seneca County. Additionally, Mr. Macaluso volunteers on the
Finance Committee for St. Francis/St. Claire Catholic Parish and is Vice President and serves on the Board of Directors for Catholic Charities
of the Finger Lakes.
Mr. Macaluso’s contacts
in the local business community and management experience make him a valuable resource for the Board of Directors.
Dr. Frank J. Nicchi,
age 70, is retired. Prior to his retirement in August 2017, Dr. Nicchi was President of the New York Chiropractic College in Seneca Falls,
New York, a position he held from 2000 until his retirement. Dr. Nicchi also served on the Board of the Association of Chiropractic Colleges
(ACC), a consortium of 19 chiropractic colleges located in the United States, Canada and New Zealand during his term as president of the
College.
Dr. Nicchi’s contacts
in the local business community and management experience make him a valuable resource for the Board of Directors.
Dr. August P. Sinicropi,
age 74, is retired. Prior to his retirement in 2017, Dr. Sinicropi was an optometrist, operating his own practice in Seneca Falls, New
York for over 45 years. He has served as a member of the New York State Optometric Association Board of Directors, the Women’s Rights
National Historical Park Public Advisory Commission, the Town of Seneca Falls Planning Board and the Seneca Falls Historical Society Board
of Directors. Additionally, he is the founding Chair of the New York State Heritage Area Park in Seneca Falls and former Chair of the
Finger Lakes Optometric Association, the Seneca County Chamber of Commerce and the Town of Seneca Falls Local Development Corporation.
Dr. Sinicropi is the brother of Director Vincent P. Sinicropi.
Dr. Sinicropi’s experience
as a small business owner and his contacts in the local business community make him a valuable resource to the Board of Directors.
Vincent P. Sinicropi,
age 67, is a certified public accountant currently operating his own CPA practice in Seneca Falls, New York. He is a former partner in
the CPA firm of EFP Rotenberg LLP, based in Rochester, New York. Prior to that he was a partner in the CPA firm of Sinicropi & Healy,
LLP and its predecessors for over 20 years before the merger of the firm with EFP Rotenberg LLP in 2011. He is a member of the AICPA and
the New York State Society of CPAs. Mr. Sinicropi is the brother of Director Dr. August P. Sinicropi.
Mr. Sinicropi’s experience
as an accountant and his contacts in the local business community make him a valuable resource to the Board of Directors.
Executive Officers Who are Not Directors
Angela M. Krezmer, age
36, is our Chief Financial Officer, a position she has held since June 2021. Prior to this appointment, from June 2020 until June 2021,
Ms. Krezmer served as Chief Financial Officer of Prosper Bank, Coatesville, Pennsylvania. Prior to that role, Ms. Krezmer served for more
than a decade at Fairport Savings Bank, Fairport, New York where she held various positions including, most recently, Chief Financial
Officer. Ms. Krezmer holds a Bachelor of Science in Accounting from Rochester Institute of Technology and is a graduate of the American
Bankers Association Stonier Graduate School of Banking program.
Anthony G. Cutrona ,
age 60, is our Growth & Profitability Officer, a position he has held since December 2016. Prior to this appointment he served as
a Retail Sales Executive with Five Star Bank beginning in April 2011. Prior to that role, he was a Senior Business Banking Relationship
Manager and Manager of the Business & Professional Banking Center for M&T Bank. Mr. Cutrona holds a Bachelor of Arts in Communication/Management
with concentrations in Marketing & Sales and is a graduate of the American Bankers Association Stonier Graduate School of Banking
program.
Board Independence
The Board of Directors has
determined that each of our Directors, other than Menzo D. Case, is considered independent under the Nasdaq Stock Market corporate governance
listing standards. Mr. Case is not considered independent because he is an executive officer of Generations Bank. In determining the independence
of our Directors, the Board of Directors considered relationships between Generations Bank and our Directors that are not required to
be reported under “ − Transactions With Certain Related Persons,” below.
Board Leadership Structure and Risk Oversight
Our Board of Directors is
chaired by Bradford M. Jones, who is an independent Director. This ensures a greater role for the independent Directors in the oversight
of Generations Bancorp and Generations Bank and active participation of the independent Directors in setting agendas and establishing
priorities and procedures for the work of the Board.
To further assure effective
independent oversight, the Board of Directors has adopted a number of governance practices, including:
| · | a majority of independent Board of Directors; |
| | |
| · | periodic meetings of the independent Directors; and |
| | |
|
· |
annual performance evaluations of the President and Chief Executive Officer by the independent Directors. |
The Board of Directors recognizes
that, depending on the circumstances, other leadership models might be appropriate. Accordingly, the Board of Directors periodically reviews
its leadership structure.
The Board of Directors is
actively involved in oversight of risks that could affect Generations Bancorp. This oversight is conducted primarily through committees
of the Board of Directors, but the full Board of Directors has retained responsibility for general oversight of risks. The Board of Directors
also satisfies this responsibility through reports by the committee chair of all board committees regarding the committees’ considerations
and actions, through review of minutes of committee meetings and through regular reports directly from officers responsible for oversight
of particular risks within Generations Bancorp. The Board of Directors of Generations Bank also has additional committees that conduct
risk oversight. All committees are responsible for the establishment of policies that guide management and staff in the day-to-day operation
of Generations Bancorp and Generations Bank such as lending, risk management, asset/liability management, investment management and others.
References to our Website Address
References to our website
address throughout this proxy statement and the accompanying materials are for informational purposes only, or to fulfill specific disclosure
requirements of the Securities and Exchange Commission’s rules.
These references are not intended to, and do not,
incorporate the contents of our website by reference into this proxy statement or the accompanying materials.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company’s common
stock is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934. The Company’s executive officers and Directors
and beneficial owners of greater than 10% of the Company’s common stock (“10% beneficial owners”) are required to file
reports with the SEC disclosing beneficial ownership and changes in beneficial ownership of the Company’s common stock. SEC rules
require disclosure in the Company’s Proxy Statement and Annual Report on Form 10-K of the failure of an executive officer, Director
or 10% beneficial owner to file such forms on a timely basis. Based solely on a review of the copies of the Forms 3, 4 and 5 and amendments
that we received with respect to transactions during the year ended December 31, 2021, we believe that all such forms were filed on a
timely basis except Director Menzo Case was late on filing a Form 4 with respect to shares that were purchased by a Supplemental Executive
Retirement Plan for the benefit of Mr. Case. The Form 4 was subsequently filed.
Code of Ethics for Senior Officers
Generations Bancorp has adopted
a Code of Ethics for Senior Officers that applies to our principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. The Code of Ethics for Senior Officers is available on our website at
www.generationsbancorpny.com. There were no amendments or waivers to the Code of Ethics for Senior Officers during 2021.
Attendance at Annual Meetings of Stockholders
Generations Bancorp does not
have a written policy regarding Directors attendance at annual meetings of stockholders, although Directors are expected to attend these
meetings absent unavoidable scheduling conflicts. All of our Directors attended our 2021 annual meeting.
Communications with the Board of Directors
Any stockholder who wishes
to contact our Board of Directors or an individual Director may do so by writing to: Generations Bancorp 20 East Bayard Street, Seneca
Falls, New York 13148, Attention: Board of Directors. The letter should indicate that the sender is a stockholder and, if shares are not
held of record, should include appropriate evidence of stock ownership. Communications are reviewed by the Corporate Secretary and are
then distributed to the Board of Directors or the individual Directors, as appropriate, depending on the facts and circumstances outlined
in the communications received. The Corporate Secretary may attempt to handle an inquiry directly (for example, where it is a request
for information about Generations Bancorp or it is a stock-related matter). The Corporate Secretary has the authority not to forward a
communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening,
illegal or otherwise inappropriate. At each Board of Directors meeting, the Corporate Secretary shall present a summary of all communications
received since the last meeting that were not forwarded and make those communications available to the Directors on request.
Meetings and Committees of the Board of Directors
The business of Generations
Bancorp is conducted at regular and special meetings of the Board of Directors and its committees. In addition, the “independent”
members of the Board of Directors (as defined in the listing standards of the Nasdaq Stock Market) meet in executive sessions. The standing
committees of the Board of Directors of Generations Bancorp are the Audit Committee, the Nominating and Corporate Governance Committee
and the Compensation Committee.
During 2021, the Board of
Directors of Generations Bancorp and Generations Bank held 12 regular meetings and no special meetings. No member of the Board of Directors
or any committee thereof attended fewer than 75% of the aggregate of:
(i) the total number of meetings of the Board
of Directors (held during the period for which the Director has been a Director); and (ii) the total number of meetings held by all committees
on which the Director served (during the periods that the Director served).
Audit Committee. The
Audit Committee is comprised of Directors Vincent Sinicropi, Aikman, Gardner and Jones, each of whom is “independent” in accordance
with applicable Securities and Exchange Commission rules and Nasdaq listing standards. Mr. Sinicropi serves as chair of the Audit Committee.
The Board of Directors has determined that Director Vincent Sinicropi qualifies as an “audit committee financial expert” as
defined under applicable Securities and Exchange Commission rules.
Our Board of Directors has
adopted a written charter for the Audit Committee, which is available on our website at www.generationsbancorpny.com. As more fully described
in the Audit Committee Charter, the Audit Committee reviews the financial records and affairs of Generations Bancorp and monitors adherence
in accounting and financial reporting to accounting principles generally accepted in the United States of America. The Audit Committee
met six times during the year ended December 31, 2021.
Compensation Committee.
The Compensation Committee is comprised of Directors Aikman, Jones, Nicchi and August Sinicropi. Director Jones serves as chair
of the Compensation Committee. Each member is considered “independent” in accordance with applicable Securities and Exchange
Commission rules and Nasdaq listing standards. The Compensation Committee met three times during the year ended December 31, 2021.
With regard to compensation
matters, the Compensation Committee’s primary purposes are to discharge the Board’s responsibilities relating to the compensation
of the Chief Executive Officer and other executive officers, to oversee Generations Bancorp’s compensation and incentive plans,
policies and programs, and to oversee Generations Bancorp’s management development and succession plans for executive officers.
The Chief Executive Officer will not be present during any committee deliberations or voting with respect to his compensation. The Compensation
Committee may form and delegate authority and duties to subcommittees as it deems appropriate.
The Compensation Committee
operates under a written charter which is available on our website at www.generationsbancorpny.com. This charter sets forth the responsibilities
of the Compensation Committee and reflects the Compensation Committee’s commitment to create a compensation structure that encourages
the achievement of long-range objectives and builds long-term value for our stockholders.
The Compensation Committee
considers a number of factors in their decisions regarding executive compensation, including, but not limited to, the level of responsibility
and performance of the individual executive officers, the overall performance of Generations Bancorp and a peer group analysis of compensation
paid at institutions of comparable size and complexity. The Compensation Committee also considers the recommendations of the President
and Chief Executive Officer with respect to the compensation of executive officers other than the President and Chief Executive Officer.
The Corporate Governance and Nominating Committee
The Corporate Governance and
Nominating Committee consists of Directors Aikman, Jones, Nicchi and August Sinicropi, each of whom is considered “independent”
as defined in the Nasdaq corporate governance listing standards. Director Jones serves as the chairman of the Committee. The Board of
Directors has adopted a written charter for the Committee. The Corporate Governance and Nominating Committee charter is posted on the
Company website: www.generationsbancorpny.com. The Corporate Governance and Nominating Committee met four times during the year ended
December 31, 2021.
The functions of the Corporate Governance and Nominating
Committee include the following:
| · | to lead the search for individuals qualified to become members of the Board and to
select Director nominees to be presented for shareholder approval; |
| | |
| · | to review and monitor compliance with the requirements for board independence; |
| | |
| · | to review the committee structure and make recommendations to the Board regarding committee
membership; and. |
| | |
| · | to develop and recommend corporate governance guidelines to the Board of Directors for its approval. |
The Corporate Governance
and Nominating Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in
service. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing
to continue in service are first considered for re-nomination, balancing the value of continuity of service by existing members of the
Board with that of obtaining a new perspective. If any member of the Board does not wish to continue in service, or if the Committee
or the Board decides not to re-nominate a member for re-election, or if the size of the Board is increased, the Committee would solicit
suggestions for Director candidates from all Board members. In addition, the Committee is authorized by its charter to engage a third
party to assist in the identification of Director nominees. The Corporate Governance and Nominating Committee would seek to identify
a candidate who at a minimum satisfies the following criteria:
| · | has personal and professional ethics and integrity; |
| | |
| · | has had experiences and achievements that have given him or her the ability to exercise
and develop good business judgment; |
| | |
| · | is willing to devote the necessary time to the work of the Board and its committees,
which includes being available for Board and committee meetings; |
| | |
| · | is familiar with the communities in which the Company operates and/or is actively engaged
in community activities; |
| | |
| · | satisfies the Director qualifications set forth in the Company’s bylaws; |
| | |
| · | is involved in other activities or interests that do not create a conflict with his
or her responsibilities to us and the Company’s shareholders; and |
| | |
| · | has the capacity and desire to represent the balanced, best interests of the Company’s
shareholders as a group, and not primarily a special interest group or constituency. |
In addition, the Corporate
Governance and Nominating Committee will also take into account whether a candidate satisfies the criteria for “independence”
under the Nasdaq corporate governance listing standards and, if a nominee is sought for service on the Audit Committee, whether the candidate
would satisfy the SEC’s independence standards applicable to members of the Company’s audit committee, the financial and accounting
expertise of a candidate, including whether an individual qualifies as an audit committee financial expert.
The Board of Directors does
not have a formal policy or specific guidelines regarding diversity among board members. However, the Board of Directors seeks members
who represent a mix of backgrounds that will reflect the diversity of our stockholders, employees, and customers, and experiences that
will enhance the quality of the Board of Directors’ deliberations and decisions. As the holding company for a community bank, the
Board of Directors also seeks Directors who can continue to strengthen Generations Bank’s position in its community and can assist
Generations Bank with business development through business and other community contacts.
Nominating Procedures.
The Board of Directors may
consider qualified candidates for Directors suggested by our stockholders. Stockholders can suggest qualified candidates for Directors
by writing to our Corporate Secretary at 20 East Bayard Street, Seneca Falls, New York 13148. The Board of Directors has adopted a procedure
by which stockholders may recommend nominees to the Board of Directors. Stockholders who wish to recommend a nominee must write to Generations
Bancorp’s Corporate Secretary and such communication must include:
| · | A statement that the writer is a stockholder and is proposing a candidate for consideration
by the Board of Directors; |
| | |
| · | The name and address of the stockholder as they appear on Generations Bancorp’s
books, and of the beneficial owner, if any, on whose behalf the nomination is made; |
| · | The class or series and number of shares of Generations Bancorp’s capital
stock that are owned beneficially or of record by such stockholder and such beneficial owner; |
| | |
| · | A description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such
stockholder; |
| | |
| · | A representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the nominee named in the stockholder’s notice; |
| | |
| · | The name, age, personal and business address of the candidate and the principal
occupation or employment of the candidate; |
| | |
| · | The candidate’s written consent to serve as a Director; |
| | |
| · | A statement of the candidate’s business and educational experience and all
other information relating to such person that would indicate such person’s qualification to serve on Generations Bancorp’s
Board of Directors; and |
| | |
| · | Such other information regarding the candidate or the stockholder as would be required
to be included in Generations Bancorp’s proxy statement pursuant to Securities and Exchange Commission Regulation 14A. |
To be timely, the submission
of a candidate for Director by a stockholder must be received by the Corporate Secretary at least 120 days prior to the anniversary date
of the proxy statement relating to the preceding year’s annual meeting of stockholders. If (i) less than 90 days’ prior public
disclosure of the date of the meeting is given to stockholders and (ii) the date of the annual meeting is advanced more than 30 days prior
to or delayed more than 30 days after the anniversary of the preceding year’s annual meeting, a stockholder’s submission of
a candidate shall be timely if delivered or mailed to and received by the Corporate Secretary of Generations Bancorp no later than the
10th day following the day on which public disclosure (by press release issued through a nationally recognized news service,
a document filed with the Securities and Exchange Commission, or on a website maintained by Generations Bancorp) of the date of the annual
meeting is first made.
Submissions that are received
and that satisfy the above requirements are forwarded to the Board of Directors for further review and consideration, using the same criteria
to evaluate the candidate as it uses for evaluating other candidates that it considers.
There is a difference between
the recommendations of nominees by stockholders pursuant to this policy and a formal nomination (whether by proxy solicitation or in person
at a meeting) by a stockholder. Stockholders have certain rights under applicable law with respect to nominations, and any such nominations
must comply with applicable law and provisions of the Bylaws of Generations Bancorp. See “Stockholder Proposals and Nominations.”
Audit Committee Report
The Audit Committee has issued a report that states as
follows:
| · | We have reviewed and discussed with management our audited consolidated financial
statements for the year ended December 31, 2021. |
| | |
| · | We have discussed with the independent registered public accounting firm the matters
required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301. |
| | |
| · | We have received the written disclosures and the letter from the independent registered
public accounting firm required by PCAOB Rule 3526, “Communication with Audit Committees Concerning Independence,” and have
discussed with the independent registered public accounting firm their independence. |
Based on the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included
in our Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the Securities and Exchange Commission.
This report shall not be deemed
incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Generations Bancorp specifically
incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
This report has been provided by the Audit Committee:
Vincent P. Sinicropi (Chairman)
Cynthia S. Aikman
James E. Gardner
Bradford M. Jones
Transactions with Certain Related Persons
Federal law generally prohibits
publicly traded companies from making loans to their executive officers and Directors, but it contains a specific exemption from the prohibition
for loans made by federally insured financial institutions, such as Generations Bank, to their executive officers and Directors in compliance
with federal banking regulations. At December 31, 2021, all of our loans to Directors and executive officers were made in the ordinary
course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time
for comparable loans with persons not related to Generations Bank, and did not involve more than the normal risk of collectability or
present other unfavorable features. These loans were performing according to their original repayment terms at December 31, 2021, and
were made in compliance with federal banking regulations.
Employee, Officer and Director Hedging
Our Insider Trading Policy
generally prohibits, for all of our Directors and executive officers, and any other employee with access to material non-public information,
the hedging of our stock and the pledging of our stock.
Executive Compensation
Summary Compensation Table
The table below summarizes
the total compensation paid to or earned by our President and Chief Executive Officer, Menzo D. Case, and one other most highly compensated
executive officer for the year ended December 31, 2021. Each individual listed in the table below is referred to as a “Named Executive
Officer.”
| |
| | |
| | |
Discretionary | | |
All Other | | |
| |
| |
| | |
Salary | | |
Bonus | | |
Compensation | | |
Total | |
Name and Principal Position | |
Year | | |
($) | | |
($) | | |
($)(2) | | |
($) | |
Menzo D. Case | |
| 2021 | | |
| 288,372 | | |
| — | | |
| 58,280 | | |
| 346,652 | |
President and Chief Executive Officer | |
| 2020 | | |
| 277,149 | | |
| 10,000 | | |
| 46,946 | | |
| 334,095 | |
Kenneth V. Winn (1) | |
| 2021 | | |
| 154,970 | | |
| — | | |
| 23,454 | | |
| 178,424 | |
SVP, Director of Credit | |
| 2020 | | |
| 148,044 | | |
| 6,000 | | |
| 2,997 | | |
| 157,041 | |
Administration | |
| | | |
| | | |
| | | |
| | | |
| | |
| (1) | Mr. Winn retired on January 1, 2022. |
| (2) | The amounts in this column reflect what Generations Bank paid for, or reimbursed,
the applicable Named Executive Officers for the various benefits and perquisites received. A break-down of the various elements of compensation
in this column for 2021 is set forth in the following table: |
| |
| | |
| | |
Employer | | |
| | |
| | |
| | |
Payment | | |
| |
| |
| | |
| | |
Contributions | | |
| | |
| | |
| | |
for | | |
| |
| |
| | |
| | |
To 401(k) Plan | | |
| | |
| | |
| | |
Unused | | |
Total All | |
| |
| | |
ESOP | | |
and HSA | | |
| | |
Life | | |
SERP | | |
Vacation | | |
Other | |
| |
| | |
Contribution | | |
Contribution | | |
Automobile | | |
Insurance | | |
Contribution | | |
Time | | |
Compensation | |
Name | |
Year | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
Menzo D. Case | |
| 2021 | | |
| 3,176 | | |
| 7,330 | | |
| 6,605 | | |
| 1,539 | | |
| 29,088 | | |
| 10,543 | | |
| 58,280 | |
Kenneth V. Winn | |
| 2021 | | |
| 2,127 | | |
| 11,180 | | |
| — | | |
| 831 | | |
| — | | |
| 9,316 | | |
| 23,454 | |
Benefit Plans and Agreements
Employment Agreement.
Generations Bank entered into an employment agreement with Mr. Menzo D. Case, effective January 12, 2021. Commencing on the first
anniversary of the agreement and on each subsequent anniversary thereafter, the agreement will be renewed for an additional year so that
the remaining term will be three years for the agreement, unless a notice is provided to the executive that the agreement will not renew.
The current base salary for Mr. Case is $317,636. In addition to the base salary, the agreement provides for, among other things, participation
in bonus programs and other fringe benefit plans applicable to executive employees. The executive’s employment may be terminated
for cause at any time, in which event the executive would have no right to receive compensation or other benefits for any period after
termination.
Certain events
resulting in the executive’s termination or resignation entitle the executive to payments of severance benefits following
termination of employment. In the event of termination of employment by Generations Bank for a reason other than cause, retirement
or disability, or in the event of the employee’s voluntary termination of employment following a failure to reelect the
employee to his executive position, or a reduction in the employee’s base salary or benefits, a material change in the
employee’s functions, duties or responsibilities which would cause the employee’s position to become one of lesser
responsibility, importance or scope, the relocation of the employee’s principal place of employment by more than 25 miles, or
a material breach of the employment agreement, the agreement provides that the employee would be entitled to a lump sum cash payment
equal to one and one-half times the sum of (i) the highest rate of base salary paid to the employee at any time under the employment
agreement, and (ii) the greater of (A) the average annual bonus paid to the employee with respect to the three most recently
completed fiscal years, or (B) the cash bonus paid to the employee with respect to the fiscal year ended prior to termination of
employment. Generations Bank will also provide the employee, at Generation Bank’s expense, with continued life, medical, and
dental coverage for a period of 18 months following such termination of employment, or an amount of cash necessary for the employee
to obtain such coverage on his own; provided that such coverage period shall be 18 months from the date of termination of
employment. Under the circumstances, described above, the employee will also vest in any non-vested stock options previously granted
to the employee.
In the event of a change in
control, then the employee would be entitled to a lump sum cash payment equal to three times the sum of (i) the highest rate of base salary
paid to the employee at any time under the employment agreement, and (ii) the average annual bonus paid to the employee with respect to
the three most recently completed fiscal years, paid on the effective date of the change in control. In the event of the employee’s
termination on or after a change in control, Generations Bank will also provide the employee, at Generation Bank’s expense, with
continued life, medical, and dental coverage for a period of 36 months following such termination of employment, or an amount of cash
necessary for the employee to obtain such coverage on his own; provided that such coverage period shall be 36 months in the event of a
change in control. Under the circumstances, described above, the employee will also vest in any non-vested stock options previously granted
to the employee.
In the event of the employee’s
termination of employment due to disability, the employee will be entitled to receive 75% of his base salary and the continuation of life,
medical and dental coverage until the earlier of (i) the date the employee returns to full-time employment in the same capacity prior
to his termination, (ii) employee’s full-time employment with another employer, (iii) employee’s attainment of age 65, or
(iv) employee’s death. In the event of the employee’s death during the term of the agreement, his beneficiaries or estate
shall receive employee’s base salary for one year from the date of employee’s death, and medical, dental and other insurance
benefits will be provided for employee’s family for one year after employee’s death.
Amended and Restated
Directors Retirement Plan. Generations Bank sponsors a deferred compensation plan for Directors. Under the plan, eligible Directors
may elect to defer receipt of all or a portion of their compensation by filing a written election with the plan administrator in the year
prior to the year of deferral. Benefits under the plan commence upon the participant’s separation from service as a Director, and
may be paid in the form of a lump sum, or in quarterly or annual installments over a period of up to 10 years. Participants may elect
separate distribution forms or schedules on a year by year basis with respect to compensation covered by deferral elections for such years.
Additionally, Generations Bank will make an annual contribution to each participant’s account each year (assuming the participant
has not had a separation from service) ending the year in which the participant attains age 75. Such contribution is determined by the
Board of Directors at the time the participant becomes eligible to participate in the plan. The plan is a nonqualified plan intended to
comply with Section 409A of the Internal Revenue Code, and will be administered and construed in all respects in order to comply with
such intent.
Supplemental Executive
Retirement Plans. Generations Bank has entered into a supplemental executive retirement plan with Mr. Case. Under the terms of
the plan, Mr. Case is entitled to the value of his account balance upon termination of employment or death. Generations Bank credited
Mr. Case’s account balance $289,621 as of December 31, 2021 and will make an additional contribution of $29,088 in each subsequent
year through December 31, 2028 to Mr. Case’s plan account balance provided that Mr. Case is employed with Generations Bank on the
date of such contribution. In the event of a change in control, Generations Bank shall make a contribution to Mr. Case’s account
in the amount equal to the present value of any remaining annual contributions. Mr. Case’s account shall be distributed to the participant
within thirty (30) days of the date of the participant’s separation from service either in a lump sum or ten equal annual installments,
in accordance with the participant’s election upon the participant’s initial eligibility.
401(k) Plan.
Generations Bank maintains the Generations Bank 401(k) Plan (“401(k) Plan”). Employees who have attained age 18 and completed
90 days of service are eligible to participate in the 401(k) Plan. Under the 401(k) Plan a participant may elect to defer, on a pre-tax
basis or post-tax basis (via Roth), up to 100% of his or her salary in any plan year, subject to limits imposed by the Internal Revenue
Code. For 2022, the salary deferral contribution limit is $20,500, provided, however, that a participant over age 50 may contribute an
additional $6,500, for a total contribution of $27,000. If a participant has completed 1,000 hours of service within a 12-month period,
Generations Bank matches 25% of participant salary deferrals up to 15% of a participant’s annual compensation. Generally, unless
the participant elects otherwise, the participant’s account balance will be distributed as a result of his or her termination of
employment with Generations Bank. Each participant has an individual account under the 401(k) Plan and may direct the investment of his
or her account among a variety of investment options.
Frozen Defined
Benefit Pension Plans. Generations Bank maintains two defined benefit pension plans for eligible employees, both of which
are frozen. The Generations Bank Pension Plan accrues benefits for eligible employees of Generations Bank that were hired prior to
October 1, 2016 and The Retirement Plan of Medina Savings & Loan Association Pension Plan covers former eligible employees hired
prior to June 1, 2018 of Medina Savings & Loan Association, which merged with Generations Bank in October 2018. At December 31,
2021, the accumulated benefit obligation for the Generations Bank Pension Plan and for The Retirement Plan of Medina Savings &
Loan Association Pension Plan was $12.1 million and $3.3 million, respectively.
Employee Stock Ownership
Plan. Generations Bank maintains an employee stock ownership plan (ESOP), a tax-qualified defined contribution retirement plan,
for all eligible employees. Employees (age 21 and above) of Generations Bank who have been credited with 1,000 hours of service during
a continuous 12-month period are eligible to participate in the ESOP. In connection with the second-step conversion, the ESOP purchased
109,450 shares of Generations Bancorp common stock sold in the offering and funded its stock purchase with a loan from Generations Bancorp
equal to the aggregate purchase price of the common stock. The loan will be repaid principally through Generations Bank’s contribution
to the ESOP and dividends payable on common stock held by the ESOP over the anticipated 25-year term of the loan. The interest rate for
the ESOP loan is a fixed rate equal to the prime rate, as published in The Wall Street Journal, on the closing date of the offering.
Directors Compensation
The following table sets forth
for the year ended December 31, 2021 the total remuneration we paid to Directors of Seneca-Cayuga Bancorp and/or Directors of Generations
Bank. Mr. Case does not receive additional compensation for service as a Director.
| |
Fees Earned
or
Paid in Cash | | |
Total | |
Name | |
($) | | |
($) | |
Dr. Jose A. Acevedo | |
| 26,400 | | |
| 26,400 | |
Cynthia S. Aikman | |
| 26,400 | | |
| 26,400 | |
James E. Gardner | |
| 26,400 | | |
| 26,400 | |
Bradford M. Jones | |
| 34,800 | | |
| 34,800 | |
Gerald Macaluso | |
| 26,400 | | |
| 26,400 | |
Dr. Frank J. Nicchi | |
| 26,400 | | |
| 26,400 | |
Dr. August P. Sinicropi | |
| 26,400 | | |
| 26,400 | |
Vincent P. Sinicropi | |
| 33,600 | | |
| 33,600 | |
For the year ended December
31, 2021, each Director of Generations Bank was paid retainer of $2,200 per month, except the Chairman of the Board was paid a retainer
of $2,900 per month and the Chairman of the Audit Committee was a paid a retainer of $2,800 per month.
PROPOSAL II—RATIFICATION
OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CHANGE IN ACCOUNTANTS
Current Change in Accountant
On February 28, 2022, BKD,
LLP (“BKD”) was dismissed as the independent registered public accounting firm for Generations Bancorp (the “Company”),
the successor corporation to Seneca-Cayuga Bancorp, Inc. (“SCAY”), upon the completion of the second-step mutual to stock
conversion of The Seneca Falls Savings Bank, MHC, which was consummated on January 12, 2021. The decision to dismiss BKD was approved
by the Audit Committee of the Board of Directors of the Company. The dismissal was effective on March 24, 2022, upon the issuance of the
Company’s consolidated financial statements for the year ended December 31, 2021.
During the years ended December
31, 2021 and 2020 and the subsequent interim period through March 24, 2022, there were no: (1) disagreements with BKD on any matter of
accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved
to their satisfaction, would have caused them to make reference in connection with their opinion to the subject matter of the disagreement,
or (2) reportable events under Item 304(a)(1)(v) of Regulation S-K.
The audit reports of BKD on
the consolidated financial statements of the Company as of and for the years ended December 31, 2021 and 2020 did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
Before filing this Current
Report on Form 8-K and an Amended Current Report on Form 8-K/A with the SEC, the Company provided BKD with a copy of the disclosures contained
in this Item 4.01(a). The Company requested that BKD issue a letter, addressed to the SEC, stating whether or not BKD agrees with the
statements contained in this Item 4.01(a). A copy of BKD’s letters dated March 4, 2022 and March 25, 2022, addressed to the SEC,
were filed as Exhibits 16.1 to the Current Report on Form 8-K and on Form 8-K/A.
On March 15, 2022, the Company
engaged Bonadio & Co., LLP (“Bonadio”) as the Registrant’s independent registered public accounting firm for the
year ending December 31, 2022. The engagement was approved by the Audit Committee of the Board of Directors of the Registrant. During
the years ended December 31, 2021 and 2020, and the subsequent interim period prior to the engagement of Bonadio, the Registrant did not
consult with Bonadio regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
The Audit Committee of Generations
Bancorp has approved the engagement of Bonadio to be our independent registered public accounting firm for the year ending December 31,
2022, subject to the ratification of the engagement by our stockholders. At the annual meeting, stockholders will consider and vote on
the ratification of the Audit Committee’s engagement of Bonadio for the year ending December 31, 2022. A representative of Bonadio
is expected to attend the annual meeting.
Even if the engagement of
Bonadio is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting
firm at any time during the year if it determines that such change would be in the best interests of Generations Bancorp and its stockholders.
Historical Change of Accountants
In connection with our MHC
conversion stock offering, on April 30, 2020, Seneca-Cayuga Bancorp, Inc., our predecessor company, dismissed Bonadio and on May 5, 2020,
Seneca-Cayuga Bancorp engaged BKD, LLP (“BKD”), an independent registered public accounting firm, to audit its consolidated
financial statements as of and for the years ended December 31, 2019 and 2018. Prior to engaging BKD, Seneca-Cayuga Bancorp did not consult
with BKD during the years ended December 31, 2019 and 2018 on the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on Seneca-Cayuga Bancorp’s consolidated financial statements,
or any other matter that was the subject of a disagreement as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions or a reportable event as that term is defined in Item 304(a)(1)(v) of Regulation S-K. The engagement of BKD was
approved by the audit committee of the Board of Directors of Seneca-Cayuga Bancorp.
Bonadio’s report on
the consolidated financial statements of Seneca-Cayuga Bancorp as of and for the year ended December 31, 2019 did not contain an adverse
opinion or disclaimer of opinion, nor was such report qualified or modified as to uncertainty, audit scope or accounting principles. During
the fiscal year ended December 31, 2019, and the subsequent interim period through April 30, 2020, Seneca-Cayuga Bancorp had no disagreements
with Bonadio on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to its satisfaction, would have caused Bonadio to make reference in connection with its opinion to the
subject matter of the disagreement during its audit of the year ended December 31, 2019. During the fiscal year ended December 31, 2019,
and the subsequent interim period through April 30, 2020, there were no “reportable events” as such term is defined in Item
304(a)(1)(v) of Regulation S-K.
Bonadio was provided with
a copy of the above statements on or about September 1, 2020, and Seneca-Cayuga Bancorp requested that it furnish a letter to the Securities
and Exchange Commission stating whether or not it agrees with these statements. Bonadio furnished a letter dated September 9, 2020 addressed
to the Securities and Exchange Commission and filed as Exhibit 16 to Generations Bancorp’s registration statement stating its agreement
with the above statements as they relate to Bonadio.
Set forth below is certain
information concerning aggregate fees billed for professional services rendered by BKD, LLP during the years ended December 31, 2021 and
2020.
Audit Fees. The
aggregate fees billed by BKD for professional services rendered for the audit of the Company’s annual consolidated financial statements,
review of the consolidated financial statements included in the Quarterly Reports on Form 10Q, and services that are normally provided
by BKD in connection with statutory and regulatory filings and engagements were $128,500 and $104,000 for the years ended December 31,
2021 and 2020, respectively.
Audit-Related Fees.
The aggregate fees billed for professional services rendered by BKD for audit-related services were $0 and $129,000 for the years
ended December 31, 2021 and 2020, respectively. The fees in 2020 related to work in connection with the Company’s second step conversion
offering.
Tax Fees. There were no aggregate fees billed
for professional services by BKD for tax services.
All Other Fees. There were
no other fees incurred for professional services rendered by BKD for the years ended December 31, 2021 and 2020.
The Audit Committee’s
current policy is to pre-approve all audit and non- audit services provided by the independent registered public accounting firm, either
by approving an engagement prior to the engagement or pursuant to a pre-approval policy with respect to particular services, subject to
the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended.
These services may include audit services, audit-related services, tax services, and other services. The Audit Committee may delegate
pre-approval authority to one or more members of the Audit Committee when expedition of services is necessary. The independent registered
public accounting firm and management are required to periodically report to the full Audit Committee regarding the extent of services
provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed
to date. The Audit Committee pre-approved 100% of audit-related fees and tax fees billed and paid during the years ended December 31,
2021 and 2020.
The Board of Directors recommends
a vote “FOR” the ratification of Bonadio & Co., LLP as independent registered public accounting firm for the year ending
December 31, 2022.
PROPOSAL III — APPROVAL OF GENERATIONS BANCORP NY,
INC. 2022 EQUITY INCENTIVE PLAN
The Board of Directors
has adopted, subject to stockholder approval, the Generations Bancorp NY, Inc. 2022 Equity Incentive Plan (the “2022 Equity
Incentive Plan”). The Board of Directors believes the adoption of the 2022 Equity Incentive Plan is in the best interests of
Generations Bancorp and its stockholders as a means of providing Generations Bancorp and Generations Bank with the ability to
retain, reward, attract and incentivize employees and Directors in order to promote growth, improve performance and further align
their interests with those of stockholders of Generations Bancorp through the ownership of additional shares of common stock of
Generations Bancorp.
Why We Are Seeking Approval of the 2022 Equity Incentive Plan
Many companies with which
we compete for Directors and employees, including management-level employees, are stockholder-owned companies that offer equity compensation
as part of their overall compensation programs. By approving the 2022 Equity Incentive Plan, our stockholders will give us the flexibility
we need to continue to attract and retain highly qualified employees and Directors by offering competitive compensation programs linked,
in part, to the performance of our common stock. In addition, the 2022 Equity Incentive Plan will further align the interests of our Directors
and employees, including our officers, with the interests of our stockholders by potentially increasing the ownership interests of our
Directors and employees in the common stock of Generations Bancorp.
We completed our second-step
mutual-to-stock conversion in January 2021. As part of the second-step conversion, we sold a total of 1,477,575 shares of common stock
and raised approximately $14.8 million in gross proceeds from the stock offering. A substantial majority of financial institutions that
complete a mutual-to-stock conversion have adopted equity-based incentive plans following their conversions. Our offering prospectus indicated
our intent to adopt an equity incentive plan at some point following the mutual-to-stock conversion and described the regulatory requirements
potentially applicable to an equity plan. Our prospectus also included the pro forma effect of awards granted under a future equity incentive
plan.
Highlights of the 2022 Equity Incentive Plan
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Share Reserve and Terms Generally Consistent with Banking Regulations and Industry Standards. In determining the size and terms
of the 2022 Equity Incentive Plan, the Board of Directors and Compensation Committee considered a number of factors, including: (1) industry
practices related to the adoption of equity-incentive plans by financial institutions following a mutual-to-stock conversion; and (2)
applicable banking regulations related to the adoption of equity-incentive plans by converted financial institutions in certain circumstances.
In this regard (and as described below), the maximum number of shares of common stock available under the 2022 Equity Incentive Plan
for delivery pursuant to the exercise of stock options equals 10% of the number of shares of common stock sold in the stock offering
and the maximum number of shares of common stock that may be issued as restricted stock or restricted stock units equals 4% of the number
of shares of common stock sold in the stock offering. |
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Minimum Vesting Periods for Awards. Subject to limited exceptions for death, disability or an involuntary termination without
cause at or following a change in control, the 2022 Equity Incentive Plan requires that at least 95% of the awards granted under the
plan vest not more rapidly than over a period of one year. |
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Limits on Grants to Directors and Employees. The maximum number of shares of common stock that may be delivered to any one non-employee
Director pursuant to the exercise of stock options and pursuant to the award of shares of restricted stock or restricted stock units
under the 2022 Equity Incentive Plan is 5% (30% in the aggregate for all non-employee Directors) of the shares available under the plan
for grant of stock options and shares of restricted stock or restricted stock units, respectively. The maximum number of shares of common
stock that may be delivered to any one employee pursuant to the exercise of stock options and pursuant to the award of shares of restricted
stock or restricted stock units under the 2022 Equity Incentive Plan is 25% of the shares available under the plan for grant of stock
options and shares of restricted stock or restricted stock units, respectively. |
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Share Counting. The 2022 Equity Incentive Plan provides that, if an individual forfeits an option or award or if the period to
exercise an option expires, the shares covered by the option or award will again become available for future grants. Shares withheld
to cover taxes or used to pay the exercise price of stock options will not be available for future grants. |
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No Repricing. The 2022 Equity Incentive Plan prohibits repricing and the exchange of underwater options for cash or shares without
stockholder approval. |
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No Single-Trigger Vesting upon a Change in Control. The 2022 Equity Incentive Plan requires “double trigger” vesting
of awards upon a change in control, requiring both a change in control plus an involuntary termination or a resignation for “good
reason,” except to extent an acquiror does not assume the awards. |
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No Dividends Prior to Vesting. The 2022 Equity Incentive Plan prohibits payment of dividends on restricted stock or dividend equivalent
rights on restricted stock units prior to the vesting date of the underlying award and does not permit the payment of dividend equivalent
rights on any stock option. |
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Clawback Policy. Awards under the 2022 Equity Incentive Plan are subject to the Company’s clawback policies, including under
Section 954 of the Dodd-Frank Act, as well as the Company’s trading policy restrictions and hedging/pledging policy restrictions. |
General
The following information
summarizes the material features of the 2022 Equity Incentive Plan, which is qualified in its entirety by reference to the provisions
of the 2022 Equity Incentive Plan, which is attached hereto as Appendix A. If there is a conflict between the terms of this disclosure
and the terms of the 2022 Equity Incentive Plan, the terms of the 2022 Equity Incentive Plan will control.
Subject to permitted adjustments
for certain corporate transactions, the 2022 Equity Incentive Plan authorizes the issuance or delivery to participants of up to 206,860
shares of Generations Bancorp common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and
restricted stock units. Of this number, the maximum number of shares of common stock we may issue under the 2022 Equity Incentive Plan
pursuant to the exercise of stock options is 147,757 shares, and the maximum number of shares of common stock we may issue as restricted
stock awards or restricted stock units is 59,103 shares. These amounts represent 10.0% and 4.0%, respectively, of the number of shares
of common stock issued and sold in the stock offering.
The Compensation Committee
will administer the 2022 Equity Incentive Plan. The Compensation Committee has full and exclusive power within the limitations set forth
in the 2022 Equity Incentive Plan to make all decisions and determinations regarding: (1) the selection of participants and the granting
of awards; (2) establishing the terms and conditions relating to each award; (3) adopting rules, regulations and guidelines for carrying
out the purposes of the plan; and (4) interpreting the provisions of the plan and award agreements. The 2022 Equity Incentive Plan also
permits the Compensation Committee to delegate all or part of its responsibilities and powers to any person or persons selected by it.
The Compensation Committee may, subject to the limitations set forth in the 2022 Equity Incentive Plan, grant stock options and awards
of restricted stock or restricted stock units to themselves and other members of the Board of Directors.
The Compensation Committee
may not accelerate the vesting of awards to avoid the one-year minimum vesting requirement specified in the plan except in the event of
death, disability or an involuntary termination without cause at or following a change in control. Subject to the foregoing prohibition,
the Compensation Committee has the authority to reduce, eliminate or accelerate any restrictions or vesting requirements applicable to
an award at any time after the grant of the award or to extend the time period to exercise a stock option, provided the extension complies
with Section 409A of the Internal Revenue Code.
Eligibility
All employees with a title
of not less than Senior Vice President and all Directors of Generations Bancorp and its subsidiaries, including Generations Bank, are
eligible to receive awards under the 2022 Equity Incentive Plan, except that non-employees may not receive incentive stock options under
the plan. As of April 8, 2022 (the latest practicable date before the printing of this proxy statement), there were eight non-employee
Directors and four employees of Generations Bancorp and its subsidiary, Generations Bank, eligible to receive awards under the 2022 Equity
Incentive Plan.
Types of Awards
The Compensation Committee
may determine the type and terms and conditions of awards under the 2022 Equity Incentive Plan. Awards will be evidenced by award agreements
approved by the Compensation Committee and delivered to participants. The award agreements will set forth the terms and conditions of
each award. The Compensation Committee may grant incentive and non-qualified stock options, restricted stock awards and restricted stock
units under the plan.
Stock Options.
A stock option gives the recipient or “optionee” the right to purchase shares of common stock at a specified price for a specified
period of time. The exercise price may not be less than the fair market value of the common stock on the date of grant. “Fair Market
Value” for purposes of the 2022 Equity Incentive Plan means, if the common stock of Generations Bancorp is listed on a securities
exchange, the closing sales price of the common stock or, if the common stock was not traded on a specific date, then on the immediately
preceding date on which sales were reported. If the common stock is not traded on a securities exchange, the Compensation Committee will
determine the fair market value in good faith and on the basis of objective criteria consistent with the requirements of the Internal
Revenue Code. Stock Options may not have a term longer than ten years from the date of grant.
Stock options are either “incentive”
stock options or “non-qualified” stock options. Incentive stock options have certain tax advantages and must comply with the
requirements of Section 422 of the Internal Revenue Code. Only employees are eligible to receive incentive stock options. Shares of common
stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise: (1) either in cash or with stock
valued at fair market value as of the day of exercise; (2) by a “cashless exercise” through a third party; (3) by a net settlement
of the stock option using a portion of the shares obtained on exercise in payment of the exercise price; (4) by personal, certified or
cashiers’ check; (5) by other property deemed acceptable by the Compensation Committee; or (6) by a combination of the foregoing.
Stock options are subject to vesting conditions and restrictions as determined by the Compensation Committee.
Restricted Stock.
A restricted stock award is a grant of common stock to a participant for no consideration, or any minimum consideration that may be required
by applicable law. Restricted stock awards under the 2022 Equity Incentive Plan will be granted only in whole shares of common stock and
are subject to vesting conditions and other restrictions established by the Compensation Committee consistent with the 2022 Equity Incentive
Plan. Prior to their vesting, unless otherwise determined by the Committee, the recipient of a restricted stock award may exercise any
voting rights with respect to common stock subject to an award and receive any dividends and distributions with respect to the common
stock at the time the restricted stock vests.
Restricted Stock Units.
Restricted stock units are similar to restricted stock awards in that the value of a restricted stock unit is denominated in shares of
common stock. However, unlike a restricted stock award, no shares of stock are transferred to the participant until certain requirements
or conditions associated with the award are satisfied. The limitation on the number of restricted stock awards available under the 2022
Equity Incentive Plan also applies to restricted stock units.
Limitations on Awards Under the Equity Incentive Plan
The following limits apply to awards under the 2022 Equity
Incentive Plan:
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The maximum number of shares of common stock available for awards under the 2022 Equity Incentive Plan equals 206,860 shares, of which
up to 147,757 shares of common stock may be delivered pursuant to the exercise of stock options and 59,103 shares of common stock may
be issued pursuant to restricted stock awards or restricted stock units. |
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The maximum number of shares of common stock that may be delivered to any one employee pursuant to the exercise of stock options and pursuant to restricted stock awards or restricted stock units is 36,939 shares and 14,775 shares, respectively (all of which may be granted
in any one calendar year). These maximum amounts represent 25% of the maximum number of shares of common stock that may be delivered
pursuant to the exercise of stock options and 25% of the number of shares of common stock that may be issued pursuant to restricted stock
awards or restricted stock units. |
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The maximum number of shares of common stock that may be delivered to any one non-employee Director pursuant to the exercise of stock
options and the issuance of restricted stock awards or restricted stock units is 7,387 shares and 2,955 shares, respectively (all of
which may be granted in any one calendar year). These maximum amounts represent 5% of the maximum number of shares of common stock that
may be delivered pursuant to the exercise of stock options and 5% of the maximum number of shares of common stock that may be issued
pursuant to restricted stock awards or restricted stock units. The Compensation Committee may, subject to these limitations and any other
applicable limitations set forth in the 2022 Equity Incentive Plan, grant stock options and awards of restricted stock or restricted
stock units to themselves and other members of the Board of Directors. |
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The maximum number of shares of common stock that may be delivered to all non-employee Directors, in the aggregate, pursuant to the exercise
of stock options and the issuance of restricted stock awards or restricted stock units is 44,327 shares and 17,730 shares, respectively
(all of which may be granted in any one calendar year). These maximum amounts represent 30% of the maximum number of shares of common
stock that may be delivered pursuant to the exercise of stock options and 30% of the maximum number of shares of common stock that may
be issued pursuant to restricted stock awards or restricted stock units. |
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Non-employee Directors, listed below, who are in the service of Generations Bancorp as of the annual stockholder meeting will
automatically receive initial grants of 2,770 stock options (which represents approximately 1.87% of the maximum number of stock options
available for grant) and 1,108 restricted stock awards (which represents approximately 1.87% of the maximum number of restricted stock
awards available for grant). The awards will vest at the rate of 20% per year commencing on the first anniversary of the date of grant. |
If there is a corporate transaction
involving the stock of Generations Bancorp (including, without limitation, any stock dividend, stock split or other special and nonrecurring
dividend or distribution, recapitalization, reorganization, merger, consolidation, spin-off, combination or exchange of shares), the Compensation
Committee will, in an equitable manner, adjust the number and kind of securities available for grants of stock options, restricted stock
awards or restricted stock units, the number and kind of securities that may be delivered or deliverable with respect to outstanding stock
options, restricted stock awards and restricted stock units, and the exercise price of stock options.
In addition, the Compensation
Committee is authorized to make certain other adjustments to the terms and conditions of stock options, restricted stock awards and restricted
stock units consistent with the terms of the plan.
The closing sale price
of Generations Bancorp’s common stock as quoted on the NASDAQ Capital Market on April 8, 2022 (the latest practicable date before
the printing of this proxy statement) was $11.70 per share.
Prohibition Against
Repricing of Options. The 2022 Equity Incentive Plan provides that neither the Compensation Committee nor the Board of Directors
may make any adjustment or amendment to the plan or an award that reduces or would have the effect of reducing the exercise price of a
previously granted stock option.
Prohibition on Transfer.
Generally, all awards, except non-qualified stock options, granted under the 2022 Equity Incentive Plan are not transferable, except by
will or in accordance with the laws of intestate succession. Awards may be transferable pursuant to a qualified domestic relations order.
At the Compensation Committee’s sole discretion, an individual may transfer non-qualified stock options for valid estate planning
purposes in a manner consistent with the Internal Revenue Code and federal securities laws. During the life of the participant, only the
participant may exercise stock options. However, a participant may designate a beneficiary to exercise stock options or receive any rights
that may exist upon the participant’s death with respect to awards granted under the 2022 Equity Incentive Plan.
Performance Measures
The Compensation
Committee may use performance measures for vesting purposes with respect to awards granted under the 2022 Equity Incentive Plan. The
performance measures may include one or more of the following: book value or tangible book value per share; basic earnings per share
(e.g., earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization; or earnings per
share); basic cash earnings per share; diluted earnings per share; return on assets; cash return on assets; return on equity; cash
return on equity; return on tangible equity; cash return on tangible equity; net income or net income before taxes; net interest
income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets
ratio; efficiency ratio; cash efficiency ratio; operating efficiency ratio; financial return ratios; core earnings, capital;
increase in revenue; total stockholder return; total shareholder return including special dividends; net operating income, operating
income; net interest margin or net interest rate spread; cash flow; cash earnings; stock price; assets, growth in assets, loans or
deposits, asset quality level, charge offs, loan reserves, non-performing assets, loans, deposits, growth of loans, loan production
volume, non-performing loans, deposits or assets; non-performing asset ratio; regulatory compliance or safety and soundness;
achievement of balance sheet or income statement objectives and strategic business objectives, or any combination of these or other
measures determined by the Compensation Committee.
The Compensation Committee
may base the measures on the performance of Generations Bancorp as a whole or of any one or more subsidiaries or business units and may
measure performance relative to a peer group, an index or a business plan. Performance measures may be considered as absolute measures
or changes in measures. In establishing performance measures, the Compensation Committee may provide for the inclusion or exclusion of
certain items.
Dividend Equivalents
The Compensation Committee
is authorized to grant dividend equivalents with respect to restricted stock units available under the 2022 Equity Incentive Plan. A dividend
equivalent right confers on the participant the right to receive payments equal to cash dividends or distributions with respect to all
or a portion of the number of shares of stock subject to the award. Unless otherwise determined by the Compensation Committee,
the dividend equivalent right will be paid at the time the award is settled.
Vesting of Awards
The Compensation Committee
will specify the vesting schedule or conditions of each award. Unless the Compensation Committee specifies a different vesting schedule
at the time of grant, awards under the 2022 Equity Incentive Plan, other than performance awards, will be granted with a vesting rate
not exceeding 20% per year, with the initial installment vesting no earlier than the one -year anniversary of the date of grant. If the
vesting of an award under the 2022 Equity Incentive Plan is conditioned on the completion of a specified period of service with Generations
Bancorp or its subsidiaries, without the achievement of performance measures or objectives, then the required period of service for full
vesting will be determined by the Compensation Committee and evidenced in an award agreement. Notwithstanding anything to the contrary
in the 2022 Equity Incentive Plan, at least 95% of the awards available under the plan may not vest more rapidly than over a period of
one year, unless accelerated due to death, disability or an involuntary termination of employment or service at or following a change
in control. Unless otherwise determined by the Compensation Committee, vesting will accelerate upon death, disability, an involuntary
termination of employment or service at or following a change in control or, subject to the foregoing requirements and in a manner consistent
with the plan, at the discretion of the Compensation Committee.
Change in Control
Unless otherwise provided
in an award agreement, at the time of an involuntary termination of employment or service at or following a change in control, all stock
options then held by the participant will become fully earned and exercisable (subject to the expiration provisions otherwise applicable
to the stock option). All stock options may be exercised for a period of one year following the participant’s involuntary termination,
provided, however, that no stock option will be eligible for treatment as an incentive stock option if the individual exercises the stock
option more than three months following involuntary termination of employment. At the time of an involuntary termination of employment
or service at or following a change in control, all awards of restricted stock and restricted stock units will immediately become fully
vested. If there is a change in control, any performance measures will be deemed satisfied at the “target” level as of the
date of the change in control and vest pro-rata based on the portion of the performance period elapsed at the date of the change in control,
unless data supports and the Compensation Committee certifies that the performance measures have been achieved at a level higher than
the target level as of the effective date of the change in control, in which case, the performance award will vest at the higher level.
Notwithstanding the
foregoing, if an acquiring corporation of Generations Bancorp or Generations Bank fails to assume the awards granted under the 2022
Equity Incentive Plan or fails to convert the awards to awards for the acquiring corporation’s stock options, restricted stock
or restricted stock units, the awards will vest immediately at the effective time of the change in control.
Amendment and Termination
The Board of Directors may,
at any time, amend or terminate the 2022 Equity Incentive Plan or any award granted under the 2022 Equity Incentive Plan, provided that,
except as provided in the plan, no amendment or termination may adversely impair the rights of a participant or beneficiary under an award
without the participant’s (or the affected beneficiary’s) written consent. The Board of Directors may not amend the 2022 Equity
Incentive Plan to materially increase the benefits accruing to participants under the plan, materially increase the aggregate number of
securities that may be issued under the plan (other than as provided in the 2022 Equity Incentive Plan), or materially modify the requirements
for participation in the plan, without approval of stockholders. Notwithstanding the foregoing, the Compensation Committee may amend the
2022 Equity Incentive Plan or any award agreement, to take effect retroactively or otherwise, to conform the plan or an award agreement
to current or future law or to avoid an accounting treatment resulting from an accounting pronouncement or interpretation issued by the
Securities and Exchange Commission or Financial Accounting Standards Board subsequent to the adoption of the 2022 Equity Incentive Plan,
or the making of the award affected thereby, which, in the sole discretion of the Compensation Committee, may materially and adversely
affect the financial condition or results of operations of Generations Bancorp.
Duration of Plan
The 2022 Equity Incentive
Plan will become effective upon approval by the stockholders at the annual stockholder meeting. The 2022 Equity Incentive Plan will remain
in effect as long as any award under it is outstanding; however, no awards may be granted under the 2022 Equity Incentive Plan on or after
the ten-year anniversary of the effective date of the plan. As discussed above, at any time, the Board of Directors may terminate the
2022 Equity Incentive Plan.
Federal Income Tax Considerations
The following is a
summary of the current federal income tax consequences with respect to awards under the 2022 Equity Incentive Plan:
Non-Qualified Stock
Options. The grant of a non-qualified stock option will not result in taxable income to the participant. Except as described
below, the participant will recognize ordinary income at the time of exercise in an amount equal to the excess of the fair market value
of the shares acquired over the exercise price for those shares, and Generations Bancorp will be entitled to a corresponding deduction
for tax purposes. Gains or losses realized by the individual upon disposition of the acquired shares will be treated as capital gains
and losses, with the cost basis in the shares equal to the fair market value of the shares at the time of exercise.
Incentive Stock Options.
The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option
also will not result in taxable income to the participant, provided the participant was, without a break in service, an employee of Generations
Bancorp or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months before
the date of exercise (one year before the date of exercise if the participant becomes disabled, as that term is defined in the Internal
Revenue Code).
The excess of the
fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that
is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock
option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition
of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the
fair market value of the shares at the time of exercise.
If the participant does
not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one
year after the exercise of the stock option, then, upon disposition of the acquired shares, any amount realized in excess of the
exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is less
than the exercise price. If these holding period requirements are not met, the participant will generally recognize ordinary income
at the time of the disposition of the shares, in an amount equal to the lesser of: (1) the excess of the fair market value of the
shares on the date of exercise over the exercise price; or (2) the excess, if any, of the amount realized upon disposition of the
shares over the exercise price, and Generations Bancorp will be entitled to a corresponding deduction. If the amount realized
exceeds the value of the shares on the date of exercise, any additional amount will be a capital gain. If the amount realized is
less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of
the exercise price over the amount realized upon the disposition of the shares.
Restricted Stock.
A participant will not realize taxable income at the time of the grant of restricted stock, provided that the stock subject to the award
is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a “substantial
risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder
will recognize ordinary income in an amount equal to the then fair market value of those shares and Generations Bancorp will be entitled
to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of the shares will be treated
as capital gains and losses, with the basis in the shares equal to the fair market value of the shares at the time of delivery or vesting.
Dividends paid to the holder during the restriction period, if so provided, will also be compensation income to the participant, and Generations
Bancorp will be entitled to a corresponding deduction for tax purposes. A participant who makes an election under Section 83(b) of the
Internal Revenue Code will include the full fair market value of the restricted stock award in taxable income in the year of grant at
the grant date fair market value.
Restricted Stock Unit.
A participant who has been granted a restricted stock unit will not realize taxable income as long as the award remains in the form of
a restricted stock unit. When the restricted stock unit is extinguished and the award is settled, the tax consequences for restricted
stock awards (see paragraph above) will be recognized. A restricted stock unit does not have voting rights or dividend rights. However,
the Compensation Committee may grant dividend equivalent rights. Since no stock is transferred to the participant on the grant date of
the restricted stock unit, an election to have the restricted stock unit taxed at the grant date cannot be made since Section 83(b) of
the Internal Revenue Code requires a transfer of stock.
Withholding of Taxes.
Generations Bancorp may withhold amounts from participants to satisfy tax withholding requirements. Except as otherwise provided by the
Compensation Committee, participants may have shares withheld from awards to satisfy the tax withholding requirements, provided the withholding
does not trigger adverse accounting consequences.
Change in Control.
Any acceleration of the vesting or payment of awards under the 2022 Equity Incentive Plan in the event of a change in control or termination
of employment or service following a change in control may cause part or all of the consideration involved to be treated as an “excess
parachute payment” under Section 280G of the Internal Revenue Code, which may subject the participant to a 20% excise tax and preclude
a deduction by Generations Bancorp with respect to the awards.
Deduction Limits.
Section 162(m) of the Internal Revenue Code generally limits our ability to deduct for tax purposes compensation in excess of $1.0 million
per year for each of our principal executive officer, principal financial officer and other executive officers named in the summary compensation
table (each, a “covered employee”) of our annual proxy statement, as well as any employee who has been designated a covered
employee for any fiscal year beginning after December 31, 2016. Compensation resulting from awards under the 2022 Equity Incentive Plan
will be counted toward the $1.0 million limit.
Tax Advice.
The preceding discussion is based on federal tax laws and regulations currently in effect, which are subject to change, and the discussion
does not purport to be a complete description of the federal income tax aspects of the 2022 Equity Incentive Plan. A participant may also
be subject to state and local taxes in connection with the grant of awards under the 2022 Equity Incentive Plan. Generations Bancorp suggests
participants consult with their individual tax advisors to determine the applicability of the tax rules to the awards granted to them.
Accounting Treatment
Under Financial Accounting
Standards Board Accounting Standards Codification Topic 718, Generations Bancorp is required to recognize compensation expense on its
income statement over the requisite service period or performance period based on the grant date fair value of stock options and other
equity-based compensation (such as restricted stock).
Awards to be Granted
The Board of Directors has
adopted the 2022 Equity Incentive Plan, contingent upon stockholder approval. If the 2022 Equity Incentive Plan is approved by stockholders,
the Compensation Committee may meet promptly after stockholder approval or at a later time to determine the specific terms of the awards,
including the allocation of awards to executive officers and employees. At the present time, except as described above and set forth below
regarding non-employee Directors, no specific determination has been made as to the grant or allocation of any awards to executive officers
and employees.
Clawback Policy
The 2022 Equity Incentive
Plan provides that if Generations Bancorp is required to prepare an accounting restatement due to its material noncompliance, as a result
of misconduct, with any financial reporting requirement under the federal securities laws, any participant who is subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 or who, if applicable, is subject to clawback under Section 954 of the
Dodd -Frank Act must reimburse Generations Bancorp with the required amount of any payment in settlement of an award earned or accrued
during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first
occurred) of the financial document embodying such financial reporting requirement. In addition, awards granted under the 2022 Equity
Incentive Plan are subject to any clawback policy adopted by the Board of Directors.
Initial Grants to Certain Non-Employee Directors
Non-employee Directors who
are in the service of Generations Bancorp on the date of the annual meeting will automatically be granted the following stock options
and restricted stock awards, as of the date of the annual meeting, provided that stockholders approve the 2022 Equity Incentive Plan:
| |
Restricted Stock Awards | |
Name of Non-Employee Directors | |
Dollar Value ($) (1) | | |
Number of Awards | |
Dr. Jose A. Acevedo | |
12,963 | | |
1,108 | |
Cynthia S. Aikman | |
12,963 | | |
1,108 | |
James E. Gardner | |
12,963 | | |
1,108 | |
Bradford M. Jones | |
12,963 | | |
1,108 | |
Gerald Macaluso | |
12,963 | | |
1,108 | |
Dr. Frank J. Nicchi | |
12,963 | | |
1,108 | |
Dr. August P. Sinicropi | |
12,963 | | |
1,108 | |
Vincent P. Sinicropi | |
12,963 | | |
1,108 | |
Non-Employee Directors as a Group (8 persons) | |
103,704 | | |
8,864 | |
| (1) | Amounts are based on the fair market value of Generations Bancorp common
stock on April 8, 2022 (the latest practicable date before the printing of this proxy statement) of $11.70 per share. The actual value
of the awards is not determinable since their value will depend upon the fair market value of Generations Bancorp common stock on the
date of grant. |
| |
Stock Option Awards | |
Name of Non-Employee Directors | |
Dollar Value ($) (1) | | |
Number of Awards | |
Dr. Jose A. Acevedo | |
| — | | |
| 2,770 | |
Cynthia S. Aikman | |
| — | | |
| 2,770 | |
James E. Gardner | |
| — | | |
| 2,770 | |
Bradford M. Jones | |
| — | | |
| 2,770 | |
Gerald Macaluso | |
| — | | |
| 2,770 | |
Dr. Frank J. Nicchi | |
| — | | |
| 2,770 | |
Dr. August P. Sinicropi | |
| — | | |
| 2,770 | |
Vincent P. Sinicropi | |
| — | | |
| 2,770 | |
Non-Employee Directors as a Group (8 persons) | |
| | | |
| 22,160 | |
(1) | Amounts
are not determinable because the actual value of the stock options realized will depend on
the extent to which the fair market value of Generations Bancorp common stock exceeds the
exercise price of the stock option on the date of exercise. |
These grants will
vest over a five-year period, with 20% becoming vested after the completion of one year of service following the date of grant and then
20% percent becoming vested each year of continued service thereafter for the next four years, subject to accelerated vesting upon death,
disability, or an involuntary termination of service at or following a change in control. The exercise price of the stock options will
equal the fair market value of Generations Bancorp common stock on the date of grant.
The Compensation Committee
believes the proposed awards are reasonable and intended to continue to align the economic interest of the Directors with other stockholders,
consistent with prevailing compensation practices in the competitive marketplace for similarly-situated financial institutions.
Any future grants to employees
and Directors under the 2022 Equity Incentive Plan will be determined at the discretion of the Compensation Committee which may meet promptly
after the approval of the plan. As of this time, the Compensation Committee has made no determination with respect to future grants to
Directors of Generations Bancorp or to any named executive officer.
Required Vote and Recommendation of the Board of Directors
In order to approve the 2022
Equity Incentive Plan, the proposal must receive the affirmative vote of a majority of the votes cast on this proposal at the annual stockholder
meeting. The Board of Directors recommends a vote “FOR” the approval of the 2022 Equity Incentive Plan.
STOCKHOLDER PROPOSALS AND NOMINATIONS
In order to be eligible
for inclusion in the proxy materials for our 2023 Annual Meeting of Stockholders, any stockholder proposal to take action at such
meeting must be received at Generations Bancorp’s executive office, 20 East Bayard Street, Seneca Falls, New York 13148, no
later than December 15, 2022, which is 120 days prior to the first anniversary of the date of these proxy materials. If the date of
the 2023 Annual Meeting of Stockholders is changed by more than 30 days from the anniversary date of the 2022 annual meeting, any
stockholder proposal must be received at a reasonable time before the Company prints or mails proxy materials for such meeting. Any
such proposal will be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended,
and as with any stockholder proposal (regardless of whether included in the Company’s proxy materials), the Company’s
articles of incorporation and Bylaws and the Maryland General Corporation Law.
Additionally, in accordance
with SEC Rule 14a -19, a shareholder intending to engage in a Directors election contest at the 2023 Annual Meeting of Shareholders must
give the Company notice of its intent to solicit proxies by providing the names of its nominees and certain other information by March
20, 2023.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT ANNUAL MEETING
The Company’s Bylaws
generally provides that any stockholder desiring to make a proposal for new business at an annual meeting of stockholders or to nominate
one or more candidates for election as Directors must provide a written notice delivered or mailed to and received by the Corporate Secretary
of Generations Bancorp at our principal executive office not less than 90 days nor more than 100 days before the anniversary of the prior
year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more
than thirty (30) days before the anniversary of the prior year’s annual meeting of stockholders, such written notice shall be timely
only if delivered or mailed to and received by the Corporate Secretary of Generations Bancorp at the principal executive office of the
Company no earlier than the day on which public disclosure of the date of such annual meeting is first made and not later than the 10th
day following the earlier of the day notice of the meeting was mailed to stockholders or such public disclosure was made. The notice must
include the stockholder’s name, record address, and number of shares owned, describe briefly the proposed business, the reasons
for bringing the business before the annual meeting, and any material interest of the stockholder in the proposed business. In the case
of nominations to the Board of Directors, certain information regarding the nominee must be provided. Nothing in this paragraph shall
be deemed to require the Company to include in the proxy statement and proxy relating to an annual meeting any stockholder proposal that
does not meet all of the requirements for inclusion established by the SEC in effect at the time such proposal is received.
The 2023 annual meeting of
stockholders is expected to be held on May 18, 2023. For the 2023 meeting of shareholders notice would have to be received between February
6, 2023 to February 16, 2023.
OTHER MATTERS
The Board of Directors is
not aware of any business to come before the annual meeting other than the matters described above in the Proxy Statement. However, if
any matters should properly come before the annual meeting, it is intended that the Board of Directors, as holders of the proxies, will
act as determined by a majority vote.
MISCELLANEOUS
A COPY OF GENERATION BANCORP’S ANNUAL
REPORT FOR THE YEAR ENDED DECEMBER 31, 2021 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST
TO INVESTOR RELATIONS, 20 EAST BAYARD STREET, SENECA FALLS, NEW YORK 13148 OR BY CALLING (315) 568-1167.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
Generations Bancorp’s
Proxy Statement, including the Notice of the Annual Meeting of Stockholders, and the 2021 meeting materials are available on the Internet
at www.generationsbancorpny.com/annual-meeting.
|
By Order of the Board of Directors, |
|
|
|
Lori M. Parish |
|
Corporate Secretary |
|
|
Seneca Falls, New York |
|
April 14, 2022 |
|
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Appendix A
Generations Bancorp, NY, Inc.
2022 EQUITY INCENTIVE PLAN
ARTICLE 1 - GENERAL
Section 1.1 Purpose,
Effective Date and Term. The purpose of this Generations Bancorp, NY, Inc. 2022 Equity Incentive Plan (the “Plan”)
is to promote the long-term financial success of Generations Bancorp, NY, Inc. (the “Company”), and its Subsidiaries,
including Generations Bank (the “Bank”) by providing a means to attract, retain and reward individuals who contribute
to that success and to further align their interests with those of the Company’s stockholders through the ownership of shares of
Company Stock. The “Effective Date” of the Plan shall be the date on which the Plan satisfies the applicable stockholder
approval requirements. The Plan will remain in effect as long as any Awards remain outstanding; provided, however, that no Awards
may be granted under the Plan after the day immediately prior to the ten-year anniversary of the Effective Date.
Section 1.2 Administration.
The Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”), in accordance
with Section 5.1.
Section 1.3 Participation.
Each individual who is granted or holds an Award in accordance with the terms of the Plan will be a Participant in the Plan (a “Participant”).
The grant of Awards shall be limited to Employees with a title of not less than Senior Vice President and Directors.
Section 1.4 Definitions.
Capitalized terms used in the Plan are defined in Article 8 and elsewhere in the Plan.
ARTICLE 2 - AWARDS
Section 2.1 General.
Any Award under the Plan may be granted singularly, or in combination with another Award (or Awards). Each Award under the Plan shall
be subject to the terms and conditions of the Plan and any additional terms, conditions, limitations and restrictions provided by the
Committee with respect to the Award and as evidenced in an Award Agreement. Every Award under the Plan shall require a written Award
Agreement. Subject to the provisions of Section 2.2(1)(d), an Award may be granted as an alternative to or replacement of an existing
award under the Plan or any other plan of the Company or any Subsidiary (provided, however, that no reload Awards shall be granted hereunder)
or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or its Subsidiaries,
including without limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted
under the Plan include:
(a) Stock Options.
A Stock Option means a grant under Section 2.2 that represents the right to purchase shares of Stock at an Exercise Price established
by the Committee. Any Stock Option may be either an Incentive Stock Option (an “ISO”) that is intended to satisfy
the requirements applicable to an “incentive stock option” described in Code Section 422(b), or a Non-Qualified Stock Option
(a “Non-Qualified Option”) that is not intended to be an ISO, provided, however, that no ISOs may be granted:
(i) after the ten-year anniversary of the Effective Date or the date the Plan is approved by the Board of Directors, whichever is earlier,
or (ii) to a non-employee. Unless otherwise specifically provided by its terms, any Stock Option granted under the Plan to an employee
shall be an ISO to the maximum extent permitted. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether
at the time of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option. In addition, any ISO granted
under this Plan may be unilaterally modified by the Committee to disqualify the Stock Option from ISO treatment such that it shall become
a Non-Qualified Option; provided however, that any modification will be ineffective if it causes the Award to be subject to Code Section
409A (unless, as modified, the Award complies with Code Section 409A).
(b Restricted Stock Awards.
A Restricted Stock Award means a grant of shares of Stock under Section 2.3 for no consideration or for such minimum consideration
as may be required by applicable law, subject to a time-based vesting schedule or the satisfaction of market conditions or performance
conditions.
(c) Restricted Stock Units.
A Restricted Stock Unit means a grant under Section 2.4 denominated in shares of Stock that is similar to a Restricted Stock Award except
no shares of Stock are actually awarded on the date of grant of a Restricted Stock Unit. A Restricted Stock Unit is subject to a time-based
vesting schedule or the satisfaction of market conditions or performance conditions and shall be settled in shares of Stock; provided,
however, that in the sole discretion of the Committee, determined at the time of settlement, a Restricted Stock Unit may be settled in
cash based on the Fair Market Value of a share of Stock multiplied by the number of Restricted Stock Units being settled.
(d) Performance Awards.
A Performance Award means an Award under Sections 2.2, 2.3 or 2.4 that vests upon the achievement of one or more specified performance
measures, as further set forth in Section 8.1 under “Performance Award”.
Section 2.2 Stock Options.
(a) Grant of Stock Options.
Each Stock Option shall be evidenced by an Award Agreement that specifies: (i) the number of Stock Options covered by the Stock Option;
(ii) the date of grant of the Stock Option and the Exercise Price; (iii) the vesting period or conditions to vesting; and (iv) such other
terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service
with the Company as the Committee may, in its discretion, prescribe. Stock Options may be granted as Performance Awards.
(b) Terms and Conditions.
A Stock Option shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the
Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years
with respect to an ISO granted to an Employee who is a 10% Stockholder). The “Exercise Price” of each Stock Option
shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share
of Stock); provided, however, that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a share of
Stock on the date of grant if granted to a 10% Stockholder; further, provided, that the Exercise Price may be higher or lower
in the case of Stock Options granted or exchanged in replacement of existing Awards held by an employee or Director of an acquired entity.
The payment of the Exercise Price of a Stock Option shall be by cash or, subject to limitations imposed by applicable law, by such other
means as the Committee may from time to time permit, including: (i) by tendering, either actually or constructively by attestation, shares
of Stock valued at Fair Market Value as of the date of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee,
to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company
a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; (iii)
by net settlement of the Stock Option, using a portion of the shares obtained on exercise in payment of the Exercise Price of the Stock
Option (and if applicable, tax withholding); (iv) by personal, certified or cashier’s check; (v) by other property deemed acceptable
by the Committee; or (vi) by any combination thereof. The total number of shares that may be acquired upon the exercise of a Stock Option
shall be rounded down to the nearest whole share, with cash-in-lieu paid by the Company, at its discretion, for the value of any fractional
share.
(c) Prohibition of Cash Buy-Outs
of Underwater Stock Options. Under no circumstances will any Stock Option with an Exercise Price as of an applicable date that is
greater than the Fair Market Value of a share of Stock as of the same date that was granted under the Plan be bought back by the Company
without shareholder approval.
(d) Prohibition Against Repricing.
Except for adjustments pursuant to Section 3.4, and reductions of the Exercise Price approved by the Company’s shareholders,
neither the Committee nor the Board of Directors shall have the right or authority to make any adjustment or amendment that reduces or
would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment,
cancellation (including cancellation in exchange for a cash payment in excess of the Award’s in-the-money value or in exchange
for Stock Options or other Awards), replacement grants, or other means.
(e) Prohibition on Paying
Dividends. No dividends shall be paid on Stock Options and no Dividend Equivalent Rights may be granted with respect to Stock Options.
Section 2.3. Restricted Stock Awards.
(a) Grant of Restricted Stock.
Each Restricted Stock Award shall be evidenced by an Award Agreement, that specifies: (i) the number of shares of Stock covered by the
Restricted Stock Award; (ii) the date of grant of the Restricted Stock Award; (iii) the vesting period or conditions to vesting; and (iv)
such other terms and conditions not inconsistent with the Plan, including the effect of termination of Participant’s employment
or Service with the Company as the Committee may, in its discretion, prescribe. Restricted Stock Awards may be granted as Performance
Awards. All Restricted Stock Awards shall be in the form of issued and outstanding shares of Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine, including electronically and/or solely on the books and records
maintained by the transfer agent. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee
may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted
Stock (including that the Restricted Stock may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with
the terms of the Plan and Award Agreement) and/or that the Company retain physical possession of the certificates, and that the Participant
deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.
(b) Terms and
Conditions. Each Restricted Stock Award shall be subject to the following terms and conditions:
(i) Dividends. No cash
dividends shall be paid with respect to any Restricted Stock Awards unless and until the Participant vests in the underlying share(s)
of Restricted Stock. Upon the vesting of a Restricted Stock Award, any dividends declared but not paid during the vesting period shall
be paid within thirty (30) days following the vesting date. Any stock dividends declared on shares of Stock subject to a Restricted Stock
Award shall be subject to the same restrictions and shall vest at the same time as the shares of Restricted Stock from which said dividends
were derived. All unvested dividends shall be forfeited by the Participants to the extent their underlying Restricted Stock Awards are
forfeited.
(ii) Voting Rights.
Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant
Award Agreement, a Participant shall have voting rights related to unvested, non-forfeited Restricted Stock Awards and the voting rights
may be exercised by the Participant in his or her discretion.
(iii) Tender Offers and
Merger Elections. Each Participant to whom a Restricted Stock Award is granted shall have the right to respond, or to direct the response,
with respect to the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock merger consideration election
or other offer made to, or elections made by, the holders of shares of Stock. Such a direction for any shares of Restricted Stock shall
be given by proxy or ballot (if the Participant is the beneficial owner of the shares of Restricted Stock for voting purposes) or by completing
and filing, with the inspector of elections, the trustee or such other person who shall be independent of the Company as the Committee
shall designate in its direction (if the Participant is not a beneficial owner), a written direction in the form and manner prescribed
by the Committee. If no direction is given, then the shares of Restricted Stock shall not be tendered.
Section 2.4 Restricted Stock Units.
(a) Grant of Restricted Stock
Unit Awards. Each Restricted Stock Unit shall be evidenced by an Award Agreement that specifies: (i) the number of Restricted Stock
Units covered by the Award; (ii) the date of grant of the Restricted Stock Units; (iii) the Restriction Period; and (iv) such other terms
and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Services with
the Company as the Committee may, in its discretion, prescribe.
(b) Terms and Conditions.
Each Restricted Stock Unit Award shall be subject to the following terms and conditions:
(i) A Restricted Stock
Unit Award shall be similar to a Restricted Stock Award except that no shares of Stock are actually awarded to the recipient on the
date of grant. The Committee shall impose such conditions and/or restrictions on any Restricted Stock Unit Award granted pursuant to
the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for
each Restricted Stock Unit, time-based restrictions and vesting following the attainment of performance measures, restrictions under
applicable laws or under the requirements of any Exchange or market upon which shares of Stock may be listed, or holding
requirements or sale restrictions placed by the Company upon vesting of the Restricted Stock Units. The Committee may make grants of
Restricted Stock Units upon such terms and conditions as it may determine, which may include, but is not limited to, deferring
receipt of the underlying shares of Stock provided the deferral complies with Section 409A of the Code and applicable provisions of
the Plan.
(ii)
Restricted Stock Units may be granted as Performance Awards.
(iii)
Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee,
commencing with the date of grant of a Restricted Stock Unit for which a Participant’s continued Service is required (the “Restriction
Period”), and until the later of (A) the expiration of the Restriction Period and (B) the date the applicable performance
measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
Restricted Stock Units.
(iv) A
Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.
(v) No dividends shall be
paid on Restricted Stock Units. In the sole discretion of the Committee, exercised at the time of grant, Dividend Equivalent Rights may
be assigned to Restricted Stock Units. A Dividend Equivalent Right, if any, shall be paid at the same time as the shares of Stock or cash
subject to the Restricted Stock Unit are distributed to the Participant and is otherwise subject to the same rights and restrictions as
the underlying Restricted Stock Unit.
Section 2.5 Vesting
of Awards. The Committee shall specify the vesting schedule or conditions of each Award. At least ninety-five percent (95%) of
all Awards under the Plan shall be subject to a vesting requirement of at least one year of Service following the grant of the Award and
evidenced in the Award Agreement, subject to acceleration of vesting, to the extent authorized by the Committee or set forth in the Award
Agreement, upon the Participant’s death, Disability or in connection with an Involuntary Termination at or following a Change in
Control as set forth in Article IV.
Section 2.6 Deferred
Compensation. Subject to approval by the Committee before an election is made, an Award of Restricted Stock Units may be deferred
pursuant to a valid deferral election made by a Participant. If a deferral election is made by a Participant, the Award Agreement shall
specify the terms of the deferral and shall constitute the deferral plan pursuant to the requirements of Code Section 409A. If any Award
would be considered “deferred compensation” as defined under Code Section 409A (“Deferred Compensation”),
the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement,
without the consent of the Participant, to maintain exemption from, or to comply with, Code Section 409A. Any amendment by the Committee
to the Plan or an Award Agreement pursuant to this Section 2.6 shall maintain, to the extent practicable, the original intent of the applicable
provision without violating Code Section 409A. A Participant’s acceptance of any Award under the Plan constitutes acknowledgement
and consent to such rights of the Committee, without further consideration or action. Any discretionary authority retained by the Committee
pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award which is determined to constitute
Deferred Compensation, if such discretionary authority would contravene Code Section 409A. Unless otherwise provided in a valid election
form intended to comply with Code Section 409A, all Awards that are considered Deferred Compensation hereunder shall settle and be paid
in no event later than 2½ months following the end of the calendar year with respect to which the Award’s substantial risk
of forfeiture lapsed.
Section 2.7 Effect
of Termination of Service on Awards. The Committee shall establish the effect of a Termination of Service on the continuation
of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among other things, the reason(s)
for the Termination of Service and type of Award. Unless otherwise specified by the Committee and set forth in an Award Agreement or as
set forth in any employment or severance agreement entered into by and between the Company and/or a Subsidiary and the Participant, the
following provisions shall apply to each Award granted under this Plan:
(a) Upon the Participant’s
Termination of Service for any reason other than due to Disability, death or Cause, Stock Options shall be exercisable only as to those
shares that were immediately exercisable by the Participant at the date of termination, and may be exercised only for a period of three
(3) months following termination and any Restricted Stock or Restricted Stock Units that have not vested as of the date of Termination
of Service shall expire and be forfeited.
(b) In the event of
a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised (whether or not vested), and
all Restricted Stock Awards and Restricted Stock Units that have not vested, shall expire and be forfeited.
(c) Upon Termination of Service
on account of Disability or death, all Service-based Stock Options shall be fully exercisable, whether or not then exercisable, and all
Service-based Restricted Stock Awards and Restricted Stock Units shall immediately vest as to all shares subject to an outstanding Award
at the date of Termination of Service. Upon Termination of Service for reason of Disability or death, any Awards that vest based on the
achievement of performance targets shall vest, pro-rata, by multiplying (i) the number of Awards that would be obtained based on achievement
at target (or if actual achievement of the performance measures is greater than the target level, at the actual achievement level) as
of the date of Disability or death, by (ii) a fraction, the numerator of which is the number of whole or partial months the Participant
was in Service during the performance period and the denominator of which is the number of months in the performance period. Stock Options
may be exercised for a period of one year following Termination of Service due to death or Disability, or the remaining unexpired term
of the Stock Option, if less, provided, however, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of
an optionee, the optionee’s death must have occurred while employed or within three (3) months after Termination of Service.
(d) In the event of
Termination of Service due to Retirement, a Participant’s vested Stock Options shall be exercisable for one year following Termination
of Service, provided that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than
three months following Termination of Service due to Retirement and all Stock Options that have not vested as of as of the date of Termination
of Service due to Retirement shall expire and be forfeited. In the event of Termination of Service due to Retirement, all Service-based
Restricted Stock Awards and Service- based Restricted Stock Units that have not vested as of the date of Termination of Service due to
Retirement shall expire and be forfeited and all Restricted Stock Units that vest based on the achievement of performance targets shall
vest, pro-rata, by at the end of the applicable performance period, assuming achievement at target or better, by multiplying (i) the number
of Awards that would be obtained based on achievement at target (or if actual achievement of the performance measures is greater than
the target level, at the actual achievement level), by (ii) a fraction, the numerator of which is the number of whole or partial months
the Participant was in Service during the performance period and the denominator of which is the number of months in the performance period.
(e) Notwithstanding
anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of the Stock Option.
(f) Notwithstanding
the provisions of this Section 2.7, the effect of a Change in Control on the vesting/exercisability of Stock Options, Restricted
Stock Awards, Restricted Stock Units and Performance Awards is as set forth in Article 4.
Section 2.8.
Holding Period for Vested Awards. As a condition of receipt of an Award, the Award Agreement may require a Participant to agree
to hold a vested Award or shares of Stock received upon exercise of a Stock Option for a period of time specified in the Award Agreement
(“Holding Period”). In connection with the foregoing, a Participant may be required to retain direct ownership of such
shares until the earlier of (i) the expiration of the Holding Period following the date of vesting or (ii) such person’s termination
of employment with the Company and any Subsidiary. The foregoing limitation, if applicable, shall not apply to the extent that an Award
vests due to death, Disability or an Involuntary Termination at or following a Change in Control, or to the extent that (x) a Participant
directs the Company to withhold or the Company elects to withhold shares of Stock with respect to the vesting or exercise, or, in lieu
thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the amount required to be withheld or (y)
a Participant exercises a Stock Option by a net settlement, and in the case of (x) and (y) herein, only to the extent of the shares are
withheld for tax purposes or for purposes of the net settlement.
ARTICLE 3 - Shares Subject to Plan
Section 3.1 Available
Shares. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued,
currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including shares purchased in the
open market or in private transactions.
Section 3.2 Share Limitations.
(a) Share Reserve.
Subject to the following provisions of this Section 3.2, the maximum number of shares of Stock that may be delivered to Participants and
their beneficiaries under the Plan shall be equal to 206,860 shares of Stock. The maximum number of shares of Stock that may be delivered
pursuant to the exercise of Stock Options (all of which may be granted as ISOs) is 147,757 shares of Stock. The maximum number of shares
of Stock that may be issued as Restricted Stock Awards is 59,103 shares of Stock. The aggregate number of shares available for grant under
this Plan and the number of shares of Stock subject to outstanding awards shall be subject to adjustment as provided in Section 3.4.
(b) Computation of
Shares Available. For purposes of this Section 3.2, the number of shares of Stock available for the grant of additional Stock Options
or Restricted Stock Awards shall be reduced by the number of shares of Stock previously granted, subject to the following: (i) to the
extent any shares of Stock covered by an Award (including Restricted Stock Awards) under the Plan are not delivered to a Participant or
beneficiary for any reason, including because the Award is forfeited or canceled or because a Stock Option is not exercised, then such
shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Stock available for delivery
under the Plan. To the extent: (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the
Exercise Price; or (ii) shares of Stock are withheld to satisfy withholding taxes upon exercise or vesting of an Award granted hereunder;
or (iii) shares are withheld to satisfy the exercise price of Stock Options in a net settlement of Stock Options, then the number of shares
of Stock available shall be reduced by the gross number of Stock Options exercised rather than by the net number of shares of Stock issued.
Section 3.3 Limitations on Grants to Employees and Directors.
(a) Employee Awards.
(i) Stock Options
- Employees. The maximum number of shares of Stock, in the aggregate, that may be covered by a Stock Option granted to any one Employee
under the Plan shall be 36,939 shares, all of which may be granted during any calendar year. This maximum amount represents approximately
twenty-five percent (25%) of the maximum number of shares of Stock that may be delivered pursuant to Stock Options under Section 3.2.
(ii) Restricted
Stock Awards - Employees. The maximum number of shares of Stock, in the aggregate, that may be subject to Restricted Stock Awards
granted to any one Employee under the Plan shall be 14,775 shares, all of which may be granted during any calendar year. This maximum
amount represents approximately twenty-five percent (25%) of the maximum number of shares of Stock that may be issued as Restricted Stock
Awards.
(b) Director Awards.
(i) Stock Options –
Aggregate Limit. Individual non-employee Directors may be granted Stock Options of up to 7,387 shares, in the aggregate, all of which
may be granted during any calendar year and, in addition, all non-employee Directors, in the aggregate, may be granted up to 44,327 shares
all of which may be granted during any calendar year. These maximum amounts represent approximately five percent (5%) and thirty percent
(30%), respectively, of the maximum number of shares of Stock that may be delivered pursuant to Stock Options under Section 3.2.
(ii) Restricted
Stock Awards – Aggregate Limit. Individual non-employee Directors may be granted Restricted Stock Awards of up to 2,955
shares, in the aggregate, all of which may be granted during any calendar year and, in addition, all non-employee Directors, in the
aggregate, may be granted up to 17,730 shares all of which may be granted during any calendar year. These maximum amounts represent
approximately five percent (5%) and thirty percent (30%), respectively, of the maximum number of shares of Stock that may be
delivered pursuant to Restricted Stock Awards under Section 3.2.
(iii) Initial Grants to
Non-Employee Directors. Each non-employee Director who is in the Service of the Company and/or a Subsidiary on the Effective Date
(the date of the 2022 Company annual stockholder meeting at which stockholders approve the Plan (“2022 Annual Meeting”) shall
automatically be granted an Award of Stock Options and Restricted Stock as follows:
(A) Stock Options –
Non-Employee Directors. Each non-employee Director who is in the Service of the Company and/or Subsidiary immediately following the
2022 Annual Meeting shall receive, on the Effective Date, a grant of 2,770 Stock Options, and this amount represents approximately 1.87%
of the maximum number of shares of Stock that may be delivered as Stock Options under Section 3.2. These grants will vest at the rate
of 20% per year, subject to acceleration in the event of death, Disability or an Involuntary Termination at or following a Change in Control.
(B) Restricted Stock Awards
– Non-Employee Directors. Each non-employee Director who is in the Service of the Company and/or Subsidiary immediately following
the 2022 Annual Meeting shall receive, on the Effective Date, a grant of 1,108 shares of Restricted Stock, and this amount represents
approximately 1.87% of the maximum number of shares of Stock that may be delivered as Restricted Stock Awards under Section 3.2. These
grants will vest at the rate of 20% per year, subject to acceleration in the event of death, Disability or an Involuntary Termination
at or following a Change in Control.
(c) The aggregate number of
shares available for grant under this Plan and the number of shares subject to outstanding Awards, including the limit on the number of
Awards available for grant under this Plan described in this Section 3.3, shall be subject to adjustment as provided in Section 3.4.
Section 3.4 Corporate Transactions.
(a) General. If the shares
of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable
in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after
the Effective Date, the number and kinds of shares for which grants of Stock Options, Restricted Stock and Restricted Stock Unit Awards
may be made under the Plan shall be adjusted proportionately and accordingly by the Committee, so that the proportionate interest of the
grantee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment
in outstanding Stock Options shall not change the aggregate purchase price payable with respect to shares that are subject to the unexercised
portion of the Stock Option outstanding but shall include a corresponding proportionate adjustment in the purchase price per share. In
addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Stock Options,
Restricted Stock Awards and Restricted Stock Units (including, without limitation, cancellation of Stock Options, Restricted Stock Awards
and Restricted Stock Units in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution or exchange
of Stock Options, Restricted Stock Awards and Restricted Stock Units using stock of a successor or other entity) in recognition of unusual
or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any parent
or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in response to changes in applicable laws, regulations,
or accounting principles.
(b) Merger in which
Company is Not Surviving Entity. In the event of any merger, consolidation, or other business reorganization (including, but not
limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise set forth in the agreement
relating to the consummation of such merger, consolidation or other business reorganization, any Stock Options granted under the
Plan which are outstanding immediately prior to such merger, consolidation or other business combination shall be converted into
Stock Options to purchase voting common equity securities of the business entity which survives such merger, consolidation or other
business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and
reflecting the same economic benefit (as measured by the difference between the aggregate Exercise Price and the value exchanged for
outstanding shares of Stock in such merger, consolidation or other business reorganization), all as determined by the Committee
prior to the consummation of such merger. The Committee may, at any time prior to the consummation of such merger, consolidation or
other business reorganization, direct that all, but not less than all, outstanding Stock Options be canceled as of the effective
date of such merger, consolidation or other business reorganization in exchange for a cash (or acquirer stock) payment per share of
Stock equal to the excess (if any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other
business reorganization over the Exercise Price of the Stock Option being canceled; provided, further, that in the event the
Exercise Price of outstanding Stock Options exceed the value to be exchanged for an outstanding share of Stock (an “Underwater
Stock Option”) in such merger, consolidation or other business reorganization, the Committee may, in its discretion, cancel
and terminate such Underwater Stock Options without the consent of the holder of the Stock Option and without any payment to such
holder.
Section 3.5 Delivery
of Shares. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:
(a) Compliance with Applicable
Laws. Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make
any other distribution of benefits under the Plan unless such delivery or distribution complies with all applicable laws (including, the
requirements of the Securities Act), and the applicable requirements of any Exchange or similar entity.
(b) Certificates. To
the extent that the Plan provides for the issuance of shares of Stock, the issuance may be made on a non-certificated basis, to the extent
not prohibited by applicable law or the applicable rules of any Exchange.
ARTICLE 4 - CHANGE IN CONTROL
Section 4.1 Consequence
of a Change in Control. Subject to the provisions of Section 3.4 (relating to the adjustment of shares and cancellation
of Stock Options in exchange for a cash or stock payment of the in-the-money value) and except as otherwise provided in the Plan and unless
the Committee determines otherwise:
(a) Upon an Involuntary Termination
at or following a Change in Control, all Service-based Stock Options then held by the Participant shall become fully earned and exercisable
(subject to the expiration provisions otherwise applicable to the Stock Option). All Stock Options may be exercised for a period of one
year following an Involuntary Termination following a Change in Control, provided, however, that no Stock Option shall be eligible for
treatment as an ISO in the event such Stock Option is exercised more than three (3) months following a termination of employment.
(b) Upon an Involuntary Termination
at or following a Change in Control, all Service-based Awards of Restricted Stock Awards and Restricted Stock Units, shall be fully earned
and vested immediately.
(c) Upon an Involuntary Termination
at or following a Change in Control, all Performance Awards shall vest at the greater of the target level of performance or actual annualized
performance measured as of the most recent completed fiscal quarter.
(d) Notwithstanding anything
in the Plan to the contrary, in the event of a Change in Control in which the Company is not the surviving entity, any Awards granted
under the Plan which are outstanding immediately prior to such Change in Control shall become fully vested in the event the successor
entity does not assume the Awards granted under the Plan and Performance Awards shall vest at the rate specified in Section 4.1(c) of
the Plan.
Section 4.2 Definition
of Change in Control. For purposes of the Plan, unless otherwise provided in an Award Agreement, a “Change in Control”
shall be deemed to have occurred upon the earliest to occur of the following:
(a) A change in ownership occurs
on the date that any one person, or more than one person acting as a group (as defined in Treasury regulation section 1.409A-3(i)(5)(v)(B)),
acquires ownership of stock of the Bank or Company that, together with stock held by such person or group, constitutes more than 50% of
the total fair market value or total voting power of the stock of such corporation.
(b) A change in the effective
control of the Bank or Company occurs on the date that either (i) any one person, or more than one person acting as a group (as defined
in Treasury regulation section 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the Bank or Company possessing 30% or more of the total voting power
of the stock of the Bank or Company, or (ii) a majority of the members of the Bank’s or Company’s Board of Directors is replaced
during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Bank’s
or Company’s Board of Directors prior to the date of the appointment or election.
(c) A change in a substantial
portion of the Bank’s or Company’s assets occurs on the date that any one person or more than one person acting as a group
(as defined in Treasury regulation section 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) assets from the Bank or Company that have a total gross fair market value
equal to or more than 40% of the total gross fair market value of (i) all of the assets of the Bank or Company, or (ii) the value of the
assets being disposed of, either of which is determined without regard to any liabilities associated with such assets. For all purposes
hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury regulation section
1.409A-3(g)(5).
ARTICLE 5 - COMMITTEE
Section 5.1 Administration.
The Plan shall be administered by the members of the Compensation Committee of the Company who are Disinterested Board Members. If the
Committee consists of fewer than two Disinterested Board Members, then the Board of Directors shall appoint to the Committee such additional
Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members. Any
members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision
to make or administer Awards that are made to Participants who at the time of consideration for such Award are persons subject to the
short-swing profit rules of Section 16 of the Exchange Act. The Board of Directors (or if necessary to maintain compliance with the applicable
listing standards, those members of the Board of Directors who are “independent Directors” under the corporate governance
statutes or rules of any national Exchange on which the Company lists, or has listed or seeks to list its securities, may, in their discretion,
take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect
under the Plan as if done or exercised by the Committee.
Section 5.2 Powers of
Committee. The Committee’s administration of the Plan shall be subject to the following:
(a) The Committee will have
the authority and discretion to select from among the Company’s and its Subsidiaries’ Employees and Directors those persons
who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered
by the Awards, to establish the terms, conditions, features, (including automatic exercise in accordance with Section 7.18) performance
criteria, restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and
other provisions of such Awards, to cancel or suspend Awards (subject to the restrictions imposed by Article 6) and to reduce,
eliminate or accelerate any restrictions applicable to an Award at any time after the grant of the Award, or to extend the time period
to exercise a Stock Option, provided that such extension is consistent with Code Section 409A. Notwithstanding the foregoing, the Committee
will not have the authority or discretion to accelerate the vesting requirements applicable to an Award to avoid the one -year minimum
vesting requirement pursuant to Section 2.5 except in the event of a Change in Control as provided under Section 4.1 of the Plan and in
the event of termination due to death or Disability.
(b) The Committee will have
the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and
to make all other determinations that may be necessary or advisable for the administration of the Plan.
(c) The Committee
will have the authority to define terms not otherwise defined herein.
(d) In controlling and managing
the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the certificate of incorporation
and bylaws of the Company and applicable state corporate law.
(e) The Committee will have
the authority to: (i) suspend a Participant’s right to exercise a Stock Option during a blackout period (or similar restricted period)
(a “Blackout Period”) or to exercise in a particular manner (i.e., such as a “cashless exercise” or “broker-assisted
exercise”) to the extent that the Committee deems it necessary or in the best interests of the Company in order to comply with the
securities laws and regulations issued by the SEC; and (ii) to extend the period to exercise a Stock Option by a period of time equal
to the Blackout Period, provided that the extension does not violate Section 409A of the Code, the Incentive Stock Option requirements
or applicable laws and regulations.
Section 5.3 Delegation
by Committee. Except to the extent prohibited by applicable law, the applicable rules of an Exchange upon which the Company lists
its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act, the
Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or
any part of its responsibilities and powers to any person or persons selected by it, including (a) delegating to a committee of one or
more members of the Board of Directors who are not “Disinterested Board Members,” the authority to grant Awards under the
Plan to eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members
of the Board who would be eligible to serve on the Compensation Committee of the Company pursuant to the listing requirements imposed
by any national securities Exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant awards
under the Plan. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly
to the Committee regarding the delegated duties and responsibilities and any awards so granted. Any such allocation or delegation may
be revoked by the Committee at any time.
Section 5.4 Information
to be Furnished to Committee. As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee
with data and information it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries
as to a Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons
entitled to benefits under the Plan must furnish the Committee any evidence, data or information as the Committee considers desirable
to carry out the terms of the Plan.
Section 5 Committee
Action. The Committee shall hold meetings, and may make administrative rules and regulations, as it may deem proper. A majority
of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting
at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee
without holding a meeting, shall be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee,
including interpretations of provisions of the Plan, shall be final and conclusive and shall be binding upon the Company, Participants
and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction,
direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same
in its behalf.
ARTICLE 6 - AMENDMENT AND TERMINATION
Section 6.1 General.
The Board of Directors may, as permitted by law, at any time, amend or terminate the Plan, and the Board of Directors or the Committee
may, at any time, amend any Award Agreement, provided that no amendment or termination (except as provided in Section 2.6, Section
3.4 and Section 6.2) may cause the Award to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the
absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary),
adversely impair the rights of any Participant or beneficiary under any Award granted under the Plan before the date the amendment is
adopted by the Board of Directors or made by the Committee; provided, however, that, no amendment may (a) materially increase the
benefits accruing to Participants under the Plan; (b) materially increase the aggregate number of securities that may be issued under
the Plan, other than pursuant to Section 3.4, or (c) materially modify the requirements for participation in the Plan, unless the
amendment under (a), (b) or (c) above is approved by the Company’s stockholders.
Section 6.2 Amendment
to Conform to Law and Accounting Changes. Notwithstanding any provision in this Plan or any Award Agreement to the contrary, the
Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the
purpose of (i) conforming the Plan or the Award Agreement to any present or future law relating to plans of this or similar nature (including,
but not limited to, Code Section 409A), or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation
thereof issued by the SEC or Financial Accounting Standards Board subsequent to the adoption of the Plan or the making of the Award affected
thereby, which in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations
of the Company. By accepting an Award under this Plan, each Participant agrees and consents to any amendment made pursuant to this Section
6.2 to any Award granted under the Plan without further consideration or action.
ARTICLE 7 - GENERAL TERMS
Section 7.1 No
Implied Rights.
(a) No Rights to Specific
Assets. Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any
assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property which the
Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have
only a contractual right, evidenced by an Award Agreement, to the shares of Stock or amounts, if any, payable or distributable under the
Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the
assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
(b) No Contractual Right
to Employment or Future Awards. The Plan does not constitute a contract of employment, and selection as a Participant will not give
any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit
under the Plan, unless the right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to
be selected to receive an Award under the Plan, or, having been so selected, to receive a future Award under the Plan.
(c) No Rights as a Stockholder.
Except as otherwise provided in the Plan or in an Award Agreement, no Award shall confer upon the holder thereof any rights as a stockholder
of the Company before the date on which the individual fulfills all conditions for receipt of such rights.
Section 7.2 Transferability.
Except as otherwise so provided by the Committee, Stock Options under the Plan are not transferable except: (i) as designated by the Participant
by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code Section 671 and applicable
state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust, or (iii) between spouses incident
to a divorce or pursuant to a domestic relations order, provided, however, in the case of a transfer within the meaning of this Section
7.2(iii), the Stock Option shall not qualify as an ISO as of the day of the transfer. The Committee shall have the discretion to permit
the transfer of vested Stock Options (other than ISOs) under the Plan; provided, however, that such transfers shall be limited
to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of Immediate Family Members or
to charitable organizations, and; provided, further, that the transfers are not made for consideration to the Participant.
Awards of Restricted Stock
shall not be transferable, except in the event of death, before the time that the Awards vest in the Participant. A Restricted Stock Unit
Award is not transferable, except in the event of death, before the time that the Restricted Stock Unit Award vests in the Participant
and property in which the Restricted Stock Unit is denominated is distributed to the Participant or the Participant’s beneficiary.
A Beneficiary, transferee,
or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the
Plan and any Award Agreement applicable to the Participant, except as otherwise determined by the Committee, and to any additional terms
and conditions deemed necessary or appropriate by the Committee.
Section 7.3 Designation
of Beneficiaries. A Participant may file with the Company a written designation of a beneficiary or beneficiaries under this
Plan and may from time to time revoke or amend any the designation. Any designation of beneficiary under this Plan shall be
controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations
order); provided, however, that if the Committee is in doubt as to the entitlement of any the beneficiary to any Award, the
Committee may determine to recognize only the legal representative of the Participant in which case the Company, the Committee and
the members thereof shall not be under any further liability to anyone.
Section 7.4 Non-Exclusivity.
Neither the adoption of this Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval
(and any subsequent approval by the stockholders of the Company) shall be construed as creating any limitations on the power of the Board
of Directors or the Committee to adopt other incentive arrangements as may be deemed desirable, including, without limitation, the granting
of Restricted Stock Awards, Restricted Stock Units and/or Stock Options otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
Section 7.5 Award
Agreement. Each Award granted under the Plan shall be evidenced by an Award Agreement. A copy of the Award Agreement, in any
medium chosen by the Committee, shall be provided (or made available electronically) to the Participant, and the Committee may, but need
not require, that the Participant sign a copy of the Award Agreement. In the absence of a specific provision in the Award Agreement,
the terms of the Plan shall control. In the event of a conflict between the terms of an Award Agreement and the Plan, the terms of the
Plan will control.
Section 7.6 Form
and Time of Elections; Notification Under Code Section 83(b). Unless otherwise specified herein, each election required or permitted
to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof,
shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with
the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date
of grant or at a later date, as applicable, prohibit an individual from making an election under Code Section 83(b). If the Committee
has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election
within ten (10) days of filing notice of the election with the Internal Revenue Service or as otherwise required by the Committee. This
requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b).
Section 7.7 Evidence.
Evidence required of anyone under the Plan may be by certificate, affidavit, document or other written information upon which the person
is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section 7.8 Tax Withholding.
(a) Payment by Participant.
Each Participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the Participant for Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the
Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct
any taxes from any payment of any kind otherwise due to the Participant. The Company's obligation to deliver evidence of book entry (or
stock certificates) to any Participant is subject to and conditioned on tax withholding obligations being satisfied by the Participant.
(b) Payment in Stock.
The Committee may require or permit the Company's tax withholding obligation to be satisfied, in whole or in part, by the Company withholding
from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding
is effected) that would satisfy the withholding amount due; provided, however, that the amount withheld does not exceed the maximum
statutory tax rate or such lesser amount as is necessary to avoid liability accounting treatment. For purposes of share withholding, the
Fair Market Value of withheld shares shall be determined in the same manner as the value of Stock includible in income of the Participants.
Section
7.9 Action by Company or Subsidiary. Any action required or
permitted to be taken by the Company or any Subsidiary shall be by resolution or unanimous written consent of its Board of
Directors, or by action of one or more members of the Board of Directors (including a committee of the Board of Directors) who are
duly authorized to act for the Board of Directors, or (except to the extent prohibited by applicable law or applicable rules of the
Exchange on which the Company lists its securities) by a duly authorized officer of the Company or Subsidiary.
Section 7.10 Successors.
All obligations of the Company under this Plan shall be binding upon and inure to the benefit of any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business, stock, and/or assets of the Company.
Section 7.11 Indemnification.
To the fullest extent permitted by law and the Company’s governing documents, each person who is or shall have been a member of
the Committee, or of the Board of Directors, or an officer or Employee of the Company or a Subsidiary to whom authority was delegated
in accordance with Section 5.3, shall be indemnified and held harmless by the Company (i) against and from any loss (including
amounts paid in settlement), cost, liability or expense (including reasonable attorneys’ fees) that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or
in which he or she may be involved by reason of any action taken or failure to act under the Plan; and (ii) against and from any and all
amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment
in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability,
or expense is a result of his or her own willful misconduct or except as expressly provided by statute or regulation. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s
charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. The
foregoing right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding
in advance of its final disposition, provided, however, that, if required by applicable law, an advancement of expenses shall be made
only upon delivery to the Company of an undertaking by or on behalf of such persons to repay all amounts so advanced if it shall ultimately
be determined by final judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified
for such expenses.
Section 7.12 No Fractional
Shares. Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued or delivered pursuant to the
Plan or any Award Agreement. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional
shares or whether the fractional shares or any rights thereto shall be forfeited or otherwise eliminated by rounding down.
Section 7.13 Governing
Law. The Plan, all awards granted hereunder, and all actions taken in connection herewith shall be governed by and construed in
accordance with the laws of the State of New York, without reference to principles of conflict of laws, except as superseded by applicable
federal law. The federal and state courts located in the State of New York shall have exclusive jurisdiction over any claim, action, complaint
or lawsuit brought under the terms of the Plan. By accepting any Award, each Participant, and any other person claiming any rights under
the Plan, agrees to submit himself or herself, and any legal action brought with respect to the Plan, to the sole jurisdiction of such
courts for the adjudication and resolution of any such disputes.
Section 7.14 Benefits
Under Other Plans. Except as otherwise provided by the Committee or as set forth in a Qualified Retirement Plan, non-qualified
plan or other benefit plan, Awards to a Participant (including the grant and the receipt of benefits) under the Plan shall be disregarded
for purposes of determining the Participant’s benefits under, or contributions to, any Qualified Retirement Plan, non-qualified
plan and any other benefit plans maintained by the Participant’s employer. The term “Qualified Retirement Plan”
means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a).
Section 7.15 Validity.
If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been included
in the Plan.
Section
7.16 Notice. Unless otherwise provided in an Award Agreement, all written
notices and all other written communications to the Company provided for in the Plan or an Award Agreement shall be delivered
personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail
shall be sent via overnight or two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its
principal executive office. Notices, demands, claims and other communications shall be deemed given: (i) in the case of delivery by
overnight service with guaranteed next day delivery, the next day or the day designated for delivery; (ii) in the case of certified
or registered U.S. mail, five (5) days after deposit in the U.S. mail; or (iii) in the case of facsimile or email, the date upon
which the transmitting party received confirmation of receipt; provided, however, that in no event shall any such
communications be deemed to be given later than the date they are actually received, provided they are actually received.
If a communication is not received, it shall only
be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery
service. Communications that are to be delivered by the U.S. mail or by overnight service to the Company shall be directed to the attention
of the Company’s Chief Operating Officer and to the Corporate Secretary, unless otherwise provided in the Participant’s Award
Agreement.
Section 7.17 Forfeiture
Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect
to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance conditions of an Award. These events include, but are not limited to, termination
of employment for Cause, termination of the Participant’s provision of Services to the Company or any Subsidiary, violation of material
Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant,
or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary.
Section 7.18 Automatic
Exercise. In the sole discretion of the Committee exercised in accordance with Section 5.2(a), any Stock Options that
are exercisable but unexercised as of the day immediately before the expiration date of the Stock Option may be automatically exercised
in accordance with procedures established for this purpose by the Committee, but only if the Exercise Price is less than the Fair Market
Value of a share of Stock on such date and the automatic exercise will result in the issuance of at least one (1) whole share of Stock
to the Participant after payment of the Exercise Price and any applicable minimum tax withholding requirements. Payment of the exercise
price and any applicable tax withholding requirements shall be made by a net settlement of the Stock Option whereby the number of shares
of Stock to be issued upon exercise are reduced by a number of shares having a Fair Market Value on the date of exercise equal to the
Exercise Price and any applicable minimum tax withholding.
Section 7.19 Regulatory
Requirements. The grant and settlement of Awards under this Plan shall be conditioned upon and subject to compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.
Section 7.20 Awards Subject to Company Clawback
Policies and Restrictions.
(a) Clawback Policies.
Awards granted hereunder are subject to any clawback policy that may be adopted by the Company from time to time, whether pursuant to
the provisions of Section 954 of the Dodd-Frank Act, implementing regulations thereunder, or otherwise. If the Company is required to
prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting
requirement under the federal securities laws, and the automatic forfeiture provisions under Section 304 of the Sarbanes-Oxley Act of
2002 apply as a result, any Participant who was an executive officer of the Company at the time of grant or at the time of restatement
shall be subject to “clawback” as if such person was subject to Section 304 of the Sarbanes-Oxley Act of 2002.
(b) Trading Policy Restrictions.
Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policies and procedures, as
in effect from time to time.
(c) Hedging/Pledging Policy
Restrictions. Awards under the Plan shall be subject to the Company’s policies relating to hedging and pledging as such may
be in effect from time to time.
ARTICLE 8 - DEFINED TERMS; CONSTRUCTION
Section 8.1 In addition
to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the following definitions shall
apply:
“10% Stockholder”
means an individual who, at the time of grant, owns stock possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company.
Award” means
any Stock Option, Restricted Stock Award, Restricted Stock Unit or Performance Award or any other right or interest relating to Stock
or cash, granted to a Participant under the Plan.
“Award Agreement” means the document (in whatever medium prescribed by the Committee and whether or not a signature is required or provided by a
Participant) that evidences the terms and conditions of an Award. A copy of the Award Agreement will be provided (or made available electronically)
to each Participant.
“Board of Directors” means the Board of
Directors of the Company.
“Cause.” If
the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that
provides a definition of termination for “cause,” then, for purposes of this Plan, the term “Cause” shall
have the meaning set forth in such agreement. In the absence of such a definition, “Cause” means termination because
of (i) Participant’s conviction (including conviction on a nolo contendere plea) of a felony or of any lesser criminal offense involving
moral turpitude, fraud or dishonesty; (ii) the willful commission by Participant of a criminal or other act that, in the reasonable judgment
of the Board will likely cause substantial economic damage to the Company or the Bank or substantial injury to the business reputation
of the Company or Bank; (iii) the commission by Participant of an act of fraud in the performance of his duties on behalf of the Company
or Bank; (iv) Participant’s material violation of the Bank’s Code of Ethics; (v) the continuing willful failure of Participant
to perform his employment duties to the Company or Bank after thirty (30) days’ written notice thereof (specifying the particulars
thereof in reasonable detail) and a reasonable opportunity to be heard and cure such failure are given to Participant by the Board; (vi)
willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities,
after being instructed by the Company or a Subsidiary to cooperate, or the deliberate destruction of or deliberate failure to preserve
documents or other materials that the Participant should reasonably know to be relevant to such investigation, after being instructed
by the Company or a Subsidiary to preserve such documents, or the willful inducement of others to fail to cooperate or to fail to produce
documents or other materials; or (vii) an order of a federal or state regulatory agency or a court of competent jurisdiction requiring
the termination of Participant’s employment by the Company or the Bank.
“Change in Control” has the meaning ascribed
to it in Section 4.2.
“Code”
means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated thereunder, as modified from
time to time.
“Director” means a member of the Board
of Directors or of a Board of Directors of a Subsidiary.
“Disability.”
If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary
that provides a definition of “Disability” or “Disabled,” then, for purposes of this Plan, the terms “Disability”
or “Disabled” shall have meaning set forth in such agreement. In the absence of such a definition, “Disability”
shall be defined in accordance with the Bank’s long-term disability plan. To the extent that an Award hereunder is subject to Code
Section 409A, “Disability” or “Disabled” shall mean that a Participant: (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering
Employees. Except to the extent prohibited under Code Section 409A, if applicable, the Committee shall have discretion to determine if
a Disability has been incurred.
“Disinterested
Board Member” means a member of the Board of Directors who: (a) is not a current Employee of the Company or a Subsidiary,
(b) does not receive remuneration from the Company or a Subsidiary, either directly or indirectly, for services rendered as a
consultant or in any capacity other than as a Director, except in an amount for which disclosure would not be required pursuant to
Item 404 of SEC Regulation S-K in accordance with the proxy solicitation rules of the SEC, as amended or any successor provision
thereto, and (c) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which
disclosure would be required pursuant to Item 404(a) of SEC Regulation S-K under the proxy solicitation rules of the SEC, as amended
or any successor provision thereto. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to
conform to the requirements of a “Non-Employee Directors” under Rule 16b-3 promulgated under the Exchange Act and the
corporate governance standards imposed on compensation committees under the listing requirements imposed by any national securities
exchange on which the Company lists or seeks to list its securities.
“Dividend Equivalent
Rights” means the right, associated with a Restricted Stock Unit, to receive a payment, in cash or Stock, as applicable, equal
to the amount of dividends paid on a share of Stock, as specified in the Award Agreement.
“Employee”
means any person employed by the Company or a Subsidiary, including Directors who are employed by the Company or a Subsidiary.
“Exchange” means any national securities
exchange on which the Stock may from time to time be listed or traded.
“Exchange Act”
means the Securities Exchange Act of 1934, as amended and the rules, regulations and guidance promulgated thereunder, as modified from
time to time.
“Exercise Price” means the price established
with respect to a Stock Option pursuant to Section 2.2.
“Fair Market Value”
on any date, means (i) if the Stock is listed on an Exchange, national market system or automated quotation system, the closing sales
price on that Exchange or over such system on that date or, in the absence of reported sales on that date, the closing sales price on
the immediately preceding date on which sales were reported, or (ii) if the Stock is not listed on a an Exchange, national market system
or automated quotation system, “Fair Market Value” shall mean a price determined by the Committee in good faith on the basis
of objective criteria consistent with the requirements of Code Section 422 and applicable provisions of Section 409A.
“Good Reason.”
A termination of employment by an Employee Participant shall be deemed a termination of employment for “Good Reason”
as a result of the Participant’s resignation from the employ of the Company or any Subsidiary upon the occurrence of any of the
following events:
(i) a material reduction in Participant’s base salary or base compensation;
(ii) a
material diminution in Participant’s authority, duties or responsibilities without the written consent of Participant;
(iii) a change in the geographic
location at which Participant must perform his duties that is more than thirty (30) miles from the location of Participant’s principal
workplace on the date of this Agreement; or
(iv) in the event a Participant
is a party to an employment or change in control agreement that provides a definition for “Good Reason” or a substantially
similar term, then the occurrence of any event set forth in such definition.
Notwithstanding the foregoing,
in the event an Award is subject to Code Section 409A, then “Good Reason” shall be defined in accordance with Code
Section 409A, including the requirement that a Participant gives 60 days’ notice to the Company or the Subsidiary for whom the Participant
is employed of the Good Reason condition and the Company or Subsidiary, as applicable, shall have 30 days to cure the Good Reason condition.
Any distribution of an Award subject to Code Section 409A shall be subject to the distribution timing rules of Code Section 409A, including
any delay in the distribution of such Award, which rules shall be set forth in the Award Agreement.
“Holding Period” has the meaning ascribed
to it in Section 2.8.
“Immediate
Family Member” means with respect to any Participant: (i) any of the Participant’s children, stepchildren,
grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-
law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (ii) any natural
person sharing the Participant’s household (other than as a tenant or employee, directly or indirectly, of the Participant);
(iii) a trust in which any combination of the Participant and persons described in section (i) and (ii) above own more than fifty
percent (50%) of the beneficial interests; (iv) a foundation in which any combination of the Participant and persons described in
sections (i) and (ii) above control management of the assets; or (v) any other corporation, partnership, limited liability company
or other entity in which any combination of the Participant and persons described in sections (i) and (ii) above control more than
fifty percent (50%) of the voting interests.
“Involuntary Termination”
means the Termination of Service of a Participant by the Company or Subsidiary, other than a termination for Cause, or termination
of employment by an Employee Participant for Good Reason.
“Incentive Stock Option” or “ISO”
has the meaning ascribed to it in Section 2.1(a).
“Non-Qualified Option”
means the right to purchase shares of Stock that is either (i) granted to a Participant who is not an Employee, or (ii) granted to
an Employee and either is not designated by the Committee to be an ISO or does not satisfy the requirements of Section 422 of the Code.
“Performance Award”
means an Award that vests in whole or in part upon the achievement of one or more specified performance measures, as determined by
the Committee. Regardless of whether an Award is subject to the attainment of one or more performance measures, the Committee may also
condition the vesting thereof upon the continued Service of the Participant. The conditions for grant or vesting and the other provisions
of a Performance Award (including without limitation any applicable performance measures) need not be the same with respect to each recipient.
A Performance Award shall vest, or as to Restricted Stock Units be settled, after the Committee has determined that the performance goals
have been satisfied.
Performance measures can include,
but are not limited to: book value or tangible book value per share; basic earnings per share (e.g., earnings before interest and
taxes, earnings before interest, taxes, depreciation and amortization; or earnings per share); basic cash earnings per share; diluted
earnings per share; return on equity; net income or net income before taxes; net interest income; non-interest income; non-interest expense
to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; financial
return ratios; adjusted earnings, capital; increase in revenue; total shareholder return; net operating income, operating income; net
interest margin or net interest rate spread; stock price; assets, growth in assets, loans or deposits, asset quality level, charge offs,
loan reserves, non-performing assets, loans, deposits, growth of loans, loan production volume, non-performing loans, deposits or assets;
regulatory compliance or safety and soundness; achievement of balance sheet or income statement objectives and strategic business objectives,
or any combination of these or other measures.
Performance measures may
be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the Company or a
Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or
changes in measures. The terms of an Award may provide that partial achievement of performance measures may result in partial
payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or
fiscal year. In establishing any performance measures, the Committee may provide for the exclusion of the effects of the following
items, to the extent the exclusion is set forth in the Participant’s Award Agreement and identified in the audited financial
statements of the Company, including footnotes, or in the Management’s Discussion and Analysis section of the Company’s
annual report or in the Compensation Discussion and Analysis Section, if any, of the Company’s annual proxy statement: (i)
extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii)
dividends declared on the Company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses
incurred in connection with a merger, branch acquisition or similar transaction. Subject to the preceding sentence, if the Committee
determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which
the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures to be
unsuitable, the Committee may modify such performance measures, in whole or in part, as the Committee deems appropriate.
Notwithstanding anything to the contrary herein, performance measures relating to any Award hereunder will be modified, to the
extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock
split, or a corporate transaction, such as a merger of the Company into another corporation, any separation of a corporation or any
partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a different
business unit during a performance period, the Committee may determine that the selected performance measures or applicable
performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or
eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the
Participant in an amount determined by the Committee.
“Restricted Stock” or “Restricted Stock
Award” has the meaning ascribed to it in Sections 2.1(b) and 2.3
“Restricted Stock Unit” has the meaning
ascribed to it in Sections 2.1(c) and 2.4.
“Restriction Period” has the meaning set forth in Section 2.4(b)(iii).
“Retirement”
means retirement from employment with the Company or a Subsidiary in accordance with the then current retirement policies of the Company
or Subsidiary, as applicable. “Retirement” with respect to a non-employee Director means the termination of service from the
Board(s) of Directors of the Company and any Subsidiary following written notice to such Board(s) of Directors of the non-employee Directors
intention to retire. Notwithstanding the foregoing, unless the Committee specifies otherwise at the time of an Award, an Employee who
continues to serve on the Board following retirement as a Director or a Director who continues to serve as an advisory board member or
Director Emeritus shall not be deemed to have terminated due to Retirement until both Service as an Employee and Director, or in the latter
case, as a Director and advisory board member or Director Emeritus has terminated.
“SEC” means the United States Securities
and Exchange Commission.
“Securities Act”
means the Securities Act of 1933, as amended and the rules, regulations and guidance promulgated thereunder and modified from time to
time.
“Service” means
service as an Employee or non-employee Director of the Company or a Subsidiary, as the case may be, and shall include service as a Director
Emeritus or Advisory Director. Service shall not be deemed interrupted in the case of (i) any approved leave of absence for military service
or sickness, or for any other purpose approved by the Company or a Subsidiary, if the employee’s right to re-employment is guaranteed
either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise
so provides in writing, (ii) transfers among the Company, any Subsidiary, or any successor entities, in any capacity of Employee or Director,
or (iii) any change in status as long as the individual remains in the service of the Company or a Subsidiary in any capacity as Employee
or Director (except as otherwise provided in the Award Agreement).
“Stock” means the common stock of the Company,
$0.01 par value per share.
“Stock Option” has the meaning ascribed
to it in Sections 2.1(a) and 2.2.
“Subsidiary”
means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect to the Company as defined
in Code Section 424(f) and, other than with respect to an ISO, shall also mean any partnership or joint venture in which the Company and/or
other Subsidiary owns more than fifty percent (50%) of the capital or profits interests.
“Termination of Service”
means the first day occurring on or after a grant date on which the Participant ceases to be an Employee or Director (including a Director
Emeritus or Advisory Director), regardless of the reason for such cessation, subject to the following:
(1) The Participant’s
cessation of Service as an Employee shall not be deemed to occur by reason of the transfer of the Participant between the Company and
a Subsidiary or between two Subsidiaries.
(2) The
Participant’s cessation as an Employee shall not be deemed to occur by reason of the Participant’s being on a bona fide
leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant’s
Services provided the leave of absence does not exceed six (6) months, or if longer, so long as the Employee retains a right to
reemployment with the Company or Subsidiary under an applicable statute or by contract. For these purposes, a leave of absence
constitutes a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services
for the Company or Subsidiary. If the period of leave exceeds six (6) months and the Employee does not retain a right to
reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day
immediately following the six (6) month period. For purposes of this sub-section, to the extent applicable, an Employee’s
leave of absence shall be interpreted by the Committee in a manner consistent with Treasury Regulation Section 1.409A-1(h)(1).
(3) If, as a result of a
sale or other transaction, the Subsidiary for whom Participant is employed ceases to be a Subsidiary, and the Participant is not, following
the transaction, an Employee of the Company or an entity that is then a Subsidiary, then the occurrence of the transaction shall be treated
as the Participant’s Termination of Service caused by the Participant being discharged by the entity by which the Participant is
employed or to whom the Participant is providing Services.
(4) Except to the extent
Code Section 409A may be applicable to an Award, and subject to the foregoing paragraphs of this sub-section, the Committee shall have
discretion to determine if a Termination of Service has occurred and the date on which it occurred. If any Award under the Plan constitutes
Deferred Compensation (as defined in Section 2.6), the term Termination of Service shall be interpreted by the Committee in a manner consistent
with the definition of “Separation from Service” as defined under Code Section 409A and under Treasury Regulation Section
1.409A-1(h)(ii). For purposes of this Plan, a “Separation from Service” shall have occurred if the employer and Participant
reasonably anticipate that no further Services will be performed by the Participant after the date of the Termination of Service (whether
as an employee or as an independent contractor) or the level of further Services performed will be less than fifty percent (50%) of the
average level of bona fide Services in the thirty-six (36) months immediately preceding the Termination of Service. If a Participant is
a “Specified Employee,” as defined in Code Section 409A and any payment to be made hereunder shall be determined to be subject
to Code Section 409A, then if required by Code Section 409A, the payment or a portion of the payment (to the minimum extent possible)
shall be delayed and shall be paid on the first day of the seventh month following Participant’s Separation from Service.
(5) With respect to a Participant
who is a Director, cessation as a Director will not be deemed to have occurred if the Participant continues as a Director Emeritus or
Advisory Director. With respect to a Participant who is both an Employee and a Director, termination of employment as an Employee shall
not constitute a Termination of Service for purposes of the Plan so long as the Participant continues to provide Service as a Director
or Director Emeritus or Advisory Director.
Section 8.2 In this Plan, unless otherwise stated
or the context otherwise requires, the following uses apply:
(a) Actions permitted under this Plan may be taken at any
time and from time to time in the actor’s reasonable discretion;
(b) References to a statute
shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor,
as in effect at the relevant time;
(c) In computing periods
from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from
and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but
excluding”;
(d) References to a governmental
or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the
agency, authority or instrumentality;
(e)
Indications of time of day mean East Coast time;
(f)
The word “including” means “including, but not limited to”;
(g)
All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise specified;
(h) All words used in this Plan will be construed
to be of such gender or number as the circumstances and context require;
(i) The captions and headings
of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference
and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its
provisions;
(j) Any reference to a document
or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or
documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and
(k) All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.
REVOCABLE PROXY
GENERATIONS BANCORP NY,
INC.
ANNUAL MEETING OF STOCKHOLDERS
May 19, 2022
The undersigned hereby appoints the official proxy
committee consisting of the Board of Directors of Generations Bancorp NY, Inc. (the “Company”) with full powers of substitution
to act as attorneys and proxies for the undersigned to vote all shares of Common Stock of the Company which the undersigned is entitled
to vote at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held at our Corporate Headquarters located at 20
East Bayard Street, Seneca Falls, New York at 1:00 p.m, Eastern time, on Thursday, May 19, 2022. The official proxy committee is authorized
to cast all votes to which the undersigned is entitled as follows:
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FOR ALL |
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The election as Directors of the nominees listed below, each for a term of three years. |
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Menzo D. Case |
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Dr. Jose A. Acevedo
Cynthia S. Aikman |
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INSTRUCTION: To withhold your vote for one or more nominees, mark “For all
Except” and write the name(s) of the nominee(s) on the line(s) below. |
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The ratification of the appointment of Bonadio & Co., LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023. |
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The approval of the Generations Bancorp NY, Inc. 2022 Equity Incentive Plan. |
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The Board of Directors recommends a vote “FOR”
each of the listed proposals.
THIS PROXY WILL BE VOTED AS
DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER BUSINESS
IS PROPERLY PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THE MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
THIS PROXY IS SOLICITED
BY THE BOARD OF DIRECTORS
Should the undersigned be
present and elect to vote at the Annual Meeting or at any adjournment thereof and after notification to the Corporate Secretary of Generations
Bancorp at the Annual Meeting of the shareholder’s decision to terminate this proxy, then the power of said attorneys and proxies
shall be deemed terminated and of no further force and effect. This proxy may also be revoked by sending written notice to the Corporate
Secretary of Generations Bancorp at the address set forth on the Notice of Annual Meeting of Stockholders, or by the filing of a later
proxy prior to a vote being taken on a particular proposal at the Annual Meeting.
The undersigned acknowledges
receipt from the Company prior to the execution of this proxy of a Notice of Annual Meeting of Stockholders and proxy statement, both
dated April 14, 2022 and audited financial statements.
Dated: |
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Check Box if You Plan to Attend Annual Meeting |
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PRINT NAME OF SHAREHOLDER |
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PRINT NAME OF SHAREHOLDER |
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SIGNATURE OF SHAREHOLDER |
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SIGNATURE OF SHAREHOLDER |
Please sign exactly as your name appears on
this card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title.
Please complete and date this proxy and return it promptly in the enclosed
postage-prepaid envelope.
Generations Bancorp NY (NASDAQ:GBNY)
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