Exhibit 10.1


                          AGREEMENT AND PLAN OF MERGER

                                 By and Between

                             ONEIDA FINANCIAL CORP.

                             THE ONEIDA SAVINGS BANK

                                       and

                             VERNON BANK CORPORATION

                           THE NATIONAL BANK OF VERNON


                         DATED AS OF SEPTEMBER 12, 2006



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                                          AGREEMENT AND PLAN OF MERGER

                                               TABLE OF CONTENTS

                                                                                                           Page
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ARTICLE I-CERTAIN DEFINITIONS.................................................................................4

Section 1.01      Definitions.................................................................................4

ARTICLE II-THE MERGER AND EXCHANGE OF SHARES.................................................................10

Section 2.01      The Merger; Effects of Merger; Surviving Corporation.......................................10
Section 2.02      Conversion of Shares.......................................................................11
Section 2.03      Exchange Procedures........................................................................12
Section 2.04      Closing....................................................................................13

ARTICLE III-REPRESENTATIONS AND WARRANTIES OF VBC AND VERNON BANK............................................13

Section 3.01      Organization...............................................................................13
Section 3.02      Capitalization.............................................................................14
Section 3.03      Authority; No Violation....................................................................15
Section 3.04      Consents...................................................................................16
Section 3.05      Regulatory Reports; Financial Statements...................................................16
Section 3.06      Taxes......................................................................................17
Section 3.07      No Material Adverse Effect.................................................................17
Section 3.08      Contracts..................................................................................17
Section 3.09      Ownership of Property; Insurance Coverage..................................................19
Section 3.10      Legal Proceedings..........................................................................20
Section 3.11      Compliance With Applicable Law.............................................................20
Section 3.12      ERISA/Employee Compensation................................................................21
Section 3.13      Brokers, Finders and Financial Advisors....................................................23
Section 3.14      Environmental Matters......................................................................23
Section 3.15      Loan Portfolio.............................................................................24
Section 3.16      Related Party Transactions.................................................................26
Section 3.17      Schedule of Termination Benefits...........................................................26
Section 3.18      Deposits...................................................................................26
Section 3.19      Antitakeover Provisions Inapplicable; Required Vote of Stockholders........................26
Section 3.20      Fairness Opinion...........................................................................26
Section 3.21      Administration of Fiduciary Accounts.......................................................27
Section 3.22      Derivative Transactions....................................................................27
Section 3.23      Information in the Proxy Statement.........................................................27
Section 3.24      Good Faith.................................................................................27
Section 3.25      Community Reinvestment Act Compliance......................................................28
Section 3.26      Anti-Money Laundering Compliance...........................................................28

ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF ONEIDA FINANCIAL................................................28

Section 4.01      Organization...............................................................................28
Section 4.02      Authority; No Violation....................................................................29
Section 4.03      Consents...................................................................................30
Section 4.04      Compliance With Applicable Law.............................................................30
Section 4.05      Information to be Supplied.................................................................31
Section 4.06      Financing..................................................................................31
Section 4.07      Legal Proceedings..........................................................................31

ARTICLE V-COVENANTS OF THE PARTIES...........................................................................31

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Section 5.01      Conduct of VBC's Business..................................................................31
Section 5.02      Access; Confidentiality....................................................................36
Section 5.03      Regulatory Matters and Consents............................................................37
Section 5.04      Taking of Necessary Action.................................................................37
Section 5.05      Certain Agreements.........................................................................38
Section 5.06      No Other Bids and Related Matters..........................................................40
Section 5.07      Duty to Advise; Duty to Update the VBC Disclosure Schedules................................41
Section 5.08      Conduct of Oneida Financial's Business.....................................................41
Section 5.09      Board and Committee Minutes................................................................42
Section 5.10      Undertakings by VBC and Oneida Financial...................................................42
Section 5.11      Employee and Termination Benefits; Directors and Management................................45
Section 5.12      Duty to Advise; Duty to Update Oneida Financial's Disclosure Schedules.....................48
Section 5.13      Bank and Related Merger Transactions.......................................................49

ARTICLE VI-CONDITIONS........................................................................................49

Section 6.01      Conditions to Each Party's Obligations under this Agreement................................49
Section 6.02      Conditions to VBC's Obligations under this Agreement.......................................50
Section 6.03      Conditions to Oneida Financial's and Oneida Savings' Obligations under this Agreement......50

ARTICLE VII-TERMINATION, WAIVER AND AMENDMENT................................................................51

Section 7.01      Termination................................................................................51
Section 7.02      Effect of Termination......................................................................53

ARTICLE VIII-MISCELLANEOUS...................................................................................53

Section 8.01      Expenses...................................................................................53
Section 8.02      Non-Survival of Representations and Warranties.............................................54
Section 8.03      Amendment, Extension and Waiver............................................................54
Section 8.04      Entire Agreement...........................................................................54
Section 8.05      No Assignment..............................................................................55
Section 8.06      Notices....................................................................................55
Section 8.07      Captions...................................................................................55
Section 8.08      Counterparts...............................................................................56
Section 8.09      Severability...............................................................................56
Section 8.10      Specific Performance.......................................................................56
Section 8.11      Governing Law..............................................................................56

Exhibits:

         Exhibit A         Form of VBC Voting Agreement
         Exhibit B         Form of Interim Merger Agreement


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                          AGREEMENT AND PLAN OF MERGER

         THIS  AGREEMENT  AND PLAN OF  MERGER  (this  "Agreement"),  dated as of
September  12,  2006,  is by and  between  Oneida  Financial  Corp.,  a  Federal
corporation ("Oneida Financial"),  The Oneida Savings Bank, a New York-chartered
savings bank ("Oneida Savings"), Vernon Bank Corporation, a New York corporation
("VBC") and The National Bank of Vernon, a national bank ("Vernon  Bank").  Each
of  Oneida  Financial,   Oneida  Savings,  VBC  and  Vernon  Bank  is  sometimes
individually  referred  to herein as a  "party,"  and Oneida  Financial,  Oneida
Savings,  VBC and Vernon Bank are sometimes  collectively  referred to herein as
the "parties."

                                    RECITALS

         1. Oneida  Financial is a registered  savings and loan holding company,
with its principal  offices located in Oneida,  New York.  Oneida Financial owns
all of the issued and  outstanding  capital stock of Oneida  Savings,  both with
principal offices located in Oneida, New York.

         2. VBC is a registered bank holding company, with its principal offices
located in Vernon, New York. VBC owns all of the issued and outstanding  capital
stock of Vernon Bank,  with Vernon Bank's  principal  offices located in Vernon,
New York.

         3. The  respective  Boards of  Directors  of Oneida  Financial,  Oneida
Savings,  VBC and Vernon Bank deem it  advisable  and in the best  interests  of
their   stockholders   to  consummate  the  business   combination   transaction
contemplated  by this Agreement in which:  (i) Oneida  Savings will  incorporate
Oneida  Merger  Corp.,  which,  subject  to the terms and  conditions  set forth
herein, will merge with and into VBC with VBC as the surviving  corporation (the
"Merger"),  and in connection  therewith  each  outstanding  share of VBC Common
Stock will be cancelled in exchange for the cash payments specified herein; (ii)
immediately  following  (i),  VBC will  liquidate  into Oneida  Savings with the
result that Oneida  Savings will acquire the assets and  liabilities  of VBC and
VBC shall cease to exist (the "Company  Liquidation").  Immediately  thereafter,
the assets and  liabilities  of Vernon Bank (other than  municipal  deposits and
certain permitted assets) will be transferred to Oneida Savings, and Vernon Bank
will merge with and into Oneida Savings' commercial bank subsidiary,  State Bank
of Chittenango  ("State Bank"), with State Bank as the surviving bank (the "Bank
Merger").

         4. As an inducement to Oneida  Financial to enter into this  Agreement,
certain  stockholders of VBC have entered into that certain VBC Voting Agreement
with  Oneida  Financial  pursuant  to  which,  among  other  things,   such  VBC
stockholders  will  agree to vote their  shares of VBC Common  Stock in favor of
this Agreement and the transactions contemplated by this Agreement.

         5. The parties desire to provide for certain undertakings,  conditions,
representations, warranties and covenants in connection with the Merger, and the
other transactions contemplated by this Agreement and the VBC Voting Agreement.

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         6. In consideration of the premises and of the mutual  representations,
warranties  and  covenants  herein  contained  and intending to be legally bound
hereby, the parties hereby agree as follows:

                          ARTICLE I-CERTAIN DEFINITIONS

         Section 1.01      Definitions

         Except as otherwise  provided  herein,  as used in this Agreement,  the
following  terms shall have the indicated  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

                  "Acquisition  Proposal"  has the  meaning set forth in Section
         5.06.

                  "Affiliate"  means, with respect to any Person, any Person who
         directly, or indirectly, through one or more intermediaries,  controls,
         or is controlled by, or is under common control with,  such Person and,
         without  limiting  the  generality  of  the  foregoing,   includes  any
         executive  officer or director of such Person and any Affiliate of such
         executive officer or director.

                  "Agreement"  means  this  agreement,   and  any  amendment  or
         supplement hereto,  which constitutes a "plan of merger" between Oneida
         Financial, Oneida Merger Corp., Oneida Savings, VBC and Vernon Bank.

                  "Applications"  means the applications for regulatory approval
         which are required by the transactions contemplated hereby.

                  "Bank  Merger"  has the  meaning  given  to  that  term in the
         recitals of this Agreement.

                  "BHCA" means the Bank Holding Company Act of 1956, as amended.

                  "Business Day" means any day other than a Saturday,  Sunday or
         Federal holiday.

                  "Certificate"  has the  meaning  given to that term in Section
         2.02(iv) of this Agreement.

                  "Closing"  means the  corporate  action  taken by the  parties
         following  the approval of this  Agreement by  stockholders  of VBC and
         Regulatory  Authorities  and all relevant  conditions of this Agreement
         having been satisfied or waived. At Closing, the parties shall exchange
         certificates, letters and other documents required by this Agreement.

                  "Closing Date" means the date determined by Oneida  Financial,
         in its sole  discretion,  upon three (3) days prior  written  notice to
         VBC,  but in no event  later  than  thirty  (30)  days  after  the last
         condition  precedent  pursuant to this  Agreement has been

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         fulfilled or waived (including the expiration of any applicable waiting
         period),  or such other date as to which Oneida Financial and VBC shall
         mutually agree.

                  "Closing Expense Statement" has the meaning given to that term
         in Section 5.10(c) of this Agreement.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Company  Liquidation"  has the meaning  given to that term in
         the recitals of this Agreement.

                  "Compensation  and Benefit  Plans" means the benefit  plans of
         VBC or any VBC subsidiary described in Section 3.12 hereof.

                  "Confidentiality Agreement" means the letter agreement between
         Oneida Financial and VBC dated May 19, 2006.

                  "Department"  means the Banking Department of the State of New
         York.

                  "DIF" means the Deposit  Insurance  Fund  administered  by the
         FDIC.

                  "Dissenters'  Shares"  means  shares of VBC Common  Stock that
         have not been voted in favor of approval of the Merger and with respect
         to which  appraisal  rights  have been  perfected  in  accordance  with
         Section 623 of the NYBCL.

                  "DOL" means the U.S. Department of Labor.

                  "Environmental  Laws" means any Federal or state law, statute,
         rule, regulation, code, order, judgment, decree, injunction, common law
         or agreement with any Federal or state governmental  authority relating
         to (i) the  protection,  preservation or restoration of the environment
         (including air, water vapor, surface water, groundwater, drinking water
         supply,  surface land,  subsurface  land,  plant and animal life or any
         other natural  resource),  (ii) human health or safety  relating to the
         presence  of  Hazardous  Material,  or (iii)  exposure  to, or the use,
         storage, recycling, treatment, generation, transportation,  processing,
         handling,  labeling,  production,  release or  disposal  of,  Hazardous
         Material, in each case as amended and now in effect.

                  "ERISA" means the Employee  Retirement  Income Security Act of
         1974, as amended.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
         amended,  and the rules and regulations  promulgated  from time to time
         thereunder.

                  "Exchange Agent" means the entity selected by Oneida Financial
         and agreed to by VBC, as provided in Section 2.03(a) of this Agreement.

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                  "FDIA" means the Federal Deposit Insurance Act, as amended.

                  "FDIC" means the Federal Deposit Insurance Corporation.

                  "FHLB" means a Federal Home Loan Bank.

                  "FRB"  means the Board of  Governors  of the  Federal  Reserve
         System.

                  "GAAP" means accounting  principles  generally accepted in the
         United  States  of  America  as in  effect  at the  relevant  date  and
         consistently applied.

                  "Hazardous  Material"  means  any  substance  (whether  solid,
         liquid  or gas)  which is or could be  detrimental  to human  health or
         safety or to the environment,  currently or hereafter listed,  defined,
         designated or classified as hazardous, toxic, radioactive or dangerous,
         or otherwise regulated, under any Environmental Law, whether by type or
         by quantity, including any substance containing any such substance as a
         component.  Hazardous Material includes,  without limitation, any toxic
         waste, pollutant,  contaminant,  hazardous substance,  toxic substance,
         hazardous waste, special waste, industrial substance, oil or petroleum,
         or any derivative or by-product thereof,  radon,  radioactive material,
         asbestos,   asbestos-containing   material,   urea   formaldehyde  foam
         insulation, lead and polychlorinated biphenyl.

                  "HOLA" means the Home Owners' Loan Act, as amended.

                  "IRC" means the Internal Revenue Code of 1986, as amended.

                  "IRS" means the Internal Revenue Service.

                  "Knowledge"  as  used  with  respect  to a  Person  (including
         references  to such Person  being aware of a particular  matter)  means
         those facts that are known,  or should have been known, by the officers
         and  directors  of such  Person,  and  includes  any facts,  matters or
         circumstances  set  forth in any  written  notice  from any  Regulatory
         Authority or any other material written notice received by that Person.

                  "Loan  Property"  shall have the meaning given to such term in
         Section 3.14(b) of this Agreement.

                  "Material  Adverse  Effect"  shall  mean,  with  respect  to a
         Person,  any  adverse  effect on its  assets,  financial  condition  or
         results  of  operations  which is  material  to its  assets,  financial
         condition or results of operations on a consolidated  basis, except for
         any material adverse effect which is primarily caused by (i) any change
         in  banking  or  similar  laws,   rules  or   regulations   of  general
         applicability  or  interpretations  thereof  by  courts  or  government
         authorities,   (ii)  any  change  in  GAAP  or  regulatory   accounting
         requirements  applicable to banks or their holding companies generally,
         (iii) general changes in conditions,  including  interest rates, in the
         banking industry or in the global or United States economy or financial
         markets,  with respect to clause  (i),(ii) or (iii), to the extent

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         that such a change does not materially affect the referenced party to a
         materially  different  extent  than other  similarly  situated  banking
         organizations,  and (iv) any action or omission of the referenced party
         or any of its Subsidiaries  taken with the prior written consent of the
         other party to this Agreement in contemplation of the Merger.

                  "Merger" means the merger of Oneida Merger Corp. into VBC with
         VBC as the surviving corporation as described in Section 2.01 hereof.

                  "Merger Consideration" means the consideration payable to each
         holder  of VBC  Common  Stock  pursuant  to  Section  2.02(i)  of  this
         Agreement.

                  "Merger  Effective  Date"  means  that  date  upon  which  the
         certificate of merger as to the merger of Oneida Merger Corp.  with and
         into VBC is filed with the New York  Department of State, in accordance
         with the NYBCL, or as otherwise stated in the certificate of merger.

                  "NYBCL" means the New York Business Corporation Law.

                  "OCC" means the Office of the Comptroller of the Currency.

                  "Oneida   Financial"   means   Oneida   Financial   Corp.,   a
         federally-chartered corporation.

                  "Oneida  Financial Common Stock" has the meaning given to that
         term in Section 4.02(a) of this Agreement.

                  "Oneida Financial  Disclosure  Schedules" means the Disclosure
         Schedules  delivered by Oneida  Financial to VBC pursuant to Article IV
         of this Agreement.

                  "Oneida   Financial   Financials"   means   (i)  the   audited
         consolidated  financial  statements of Oneida  Financial as of December
         31,  2005 and 2004 and for the three  years ended  December  31,  2005,
         including  the  notes   thereto,   and  (ii)  the   unaudited   interim
         consolidated  financial  statements  of  Oneida  Financial  as of  each
         calendar quarter thereafter  included in Securities  Documents filed by
         Oneida Financial.

                  "Oneida Financial  Regulatory  Reports" means the Call Reports
         of Oneida Savings and accompanying  schedules,  as filed with the FDIC,
         for each calendar  quarter  beginning  with the quarter ended March 31,
         2005,  through the Closing Date,  and all Annual,  Quarterly or Current
         Reports  filed on Form  H(b)-11  by  Oneida  Financial  with the OTS by
         Oneida Financial from March 31, 2006 through the Closing Date.

                  "Oneida Financial  Subsidiary"  means any corporation,  50% or
         more of the  capital  stock of  which  is  owned,  either  directly  or
         indirectly,   by  Oneida  Financial  or  Oneida  Savings,   except  any
         corporation the stock of which is held as security by Oneida Savings in
         the ordinary course of its lending activities.

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                  "Oneida  Merger Corp." means Oneida  Merger Corp.,  a New York
         corporation and wholly-owned subsidiary of Oneida Savings.

                  "Oneida   Savings"  means  The  Oneida  Savings  Bank,  a  New
         York-chartered savings bank headquartered in Oneida, New York.

                  "OTS" means the Office of Thrift Supervision.

                  "Participation  Facility" shall have the meaning given to such
         term in Section 3.14(b) of this Agreement.

                  "Pension  Plan" has the meaning  given to that term in Section
         3.12(b) of this Agreement.

                  "Person" means any individual, corporation, partnership, joint
         venture,  association,  trust or "group" (as that term is defined under
         the Exchange Act).

                  "Previously  Disclosed"  shall mean  disclosed in a writing by
         either party in a disclosure schedule (the "Disclosure Schedule") dated
         of even  date  herewith  from the  party  making  such  disclosure  and
         delivered to the other party prior to the execution of this  Agreement.
         Any  information  disclosed  by one party to the other for any  purpose
         hereunder shall be deemed to be disclosed for all purposes hereunder.

                  "Proxy Statement" means the proxy statement, together with any
         supplements  thereto,  to be transmitted to holders of VBC Common Stock
         in connection with the transactions contemplated by this Agreement.

                  "Regulatory  Agreement"  has the meaning given to that term in
         Section 3.11 of this Agreement.

                  "Regulatory Approvals" means all consents, waivers, approvals,
         nonobjections and clearances  required to be obtained from or issued by
         the OTS, the FDIC, the OCC, the  Department,  the FRB or the respective
         staffs  thereof,  in order to complete  the  transactions  contemplated
         hereby.

                  "Regulatory  Authority"  means,  as applicable,  any agency or
         department  of any  federal  or  state  government,  including  without
         limitation the Department,  the Superintendent,  the FDIC, the OCC, the
         FRB, the OTS, the SEC or the respective staffs thereof.

                  "Rights"  means   warrants,   options,   rights,   convertible
         securities and other capital stock equivalents which obligate an entity
         to issue its securities.

                  "SEC" means the Securities and Exchange Commission.

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                  "Securities Act" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated from time to time thereunder.

                  "Securities  Documents"  means  all  registration  statements,
         schedules,  statements,  forms,  reports,  proxy  material,  and  other
         documents required to be filed under the Securities Laws.

                  "Securities  Laws" means the  Securities  Act and the Exchange
         Act.

                  "State  Bank"  means  the  State  Bank of  Chittenango,  a New
         York-chartered commercial bank headquartered in Chittenango, New York.

                  "Subsidiary" means any corporation, 50% or more of the capital
         stock of which is owned,  either  directly  or  indirectly,  by another
         entity,  except any  corporation the stock of which is held as security
         by either Oneida  Financial or VBC, as the case may be, in the ordinary
         course of its lending activities.

                  "Superintendent"  means  the  Superintendent  of  Banks of the
         State of New York,  and where  appropriate  includes the Department and
         the Banking Board of the State of New York.

                  "Surviving  Corporation" has the meaning given to that term in
         Section 2.01(a)(i) of this Agreement.

                  "Superior Proposal" has the meaning set forth in Section 5.06.

                  "VBC" means Vernon Bank Corporation, a New York corporation.

                  "VBC Common  Stock" shall have the meaning  given to such term
         in Section 3.02(a).

                  "VBC  Disclosure  Schedules"  means the  Disclosure  Schedules
         delivered  by VBC to Oneida  Financial  pursuant to Article III of this
         Agreement.

                  "VBC Financials" means (i) the audited consolidated  financial
         statements  of VBC as of  December  31, 2005 and 2004 and for the three
         years ended December 31, 2005,  including the notes  thereto,  and (ii)
         the unaudited interim  consolidated  financial  statements of VBC as of
         each calendar quarter thereafter through the Closing Date,  included in
         VBC  Regulatory  Reports filed by VBC with the FRB and Vernon Bank with
         the OCC.

                  "VBC Regulatory Reports" means the Call Reports of Vernon Bank
         and  accompanying  schedules,  as filed with the OCC, for each calendar
         quarter  beginning  with the quarter ended March 31, 2005,  through the
         Closing Date, and all Annual Reports on Form FR Y-6, any Current Report
         on Form FRY-6A filed with the FRB by VBC from December 31, 2005 through
         the Closing Date, as such reports may have been amended.

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                  "VBC  Subsidiary"  means any  corporation,  50% or more of the
         capital stock of which is owned, either directly or indirectly,  by VBC
         or Vernon Bank,  except any  corporation  the stock of which is held as
         security  by  Vernon  Bank  in  the  ordinary  course  of  its  lending
         activities.

                  "VBC Voting  Agreement"  means the Agreement  between  certain
         stockholders  and Oneida  Financial  and  Oneida  Savings to vote their
         shares of VBC stock in favor of the Merger.

                  "Vernon  Bank" means the National  Bank of Vernon,  a national
         bank headquartered in Vernon, New York.

                  ARTICLE II-THE MERGER AND EXCHANGE OF SHARES

         Section 2.01      The Merger; Effects of Merger; Surviving Corporation

         (a) (i) On the Merger  Effective Date,  Oneida Merger Corp. shall merge
with  and  into VBC with VBC as the  surviving  or  resulting  corporation  (the
"Merger"),  pursuant to the terms and conditions of an agreement of merger to be
entered  into between  Oneida  Merger Corp.  and VBC  substantially  in the form
attached hereto as Exhibit B. As a result of the Merger,  the separate existence
of Oneida Merger Corp.  shall cease, and VBC shall be the surviving or resulting
corporation  in the Merger  (the  "Surviving  Corporation").  As a result of the
Merger all of the property (real, personal and mixed), rights, powers and duties
and  obligations of Oneida Merger Corp.  shall be transferred to, assumed by and
vested in VBC, as the Surviving  Corporation in the Merger,  without further act
or deed, all in accordance with the applicable New York and federal law.

                  (ii)  On  the  Merger   Effective  Date,  the  Certificate  of
Incorporation of the Surviving Corporation shall be amended and restated to read
in its entirety as the Certificate of  Incorporation  of Oneida Merger Corp., as
in effect  immediately prior to the Merger Effective Date; and the Bylaws of the
Surviving Corporation shall be amended and restated to read in their entirety as
the Bylaws of Oneida Merger Corp., as in effect  immediately prior to the Merger
Effective Date, until thereafter altered, amended or repealed in accordance with
applicable law.

                  (iii) On the Merger  Effective  Date,  the directors of Oneida
Merger Corp.  duly elected and holding  office  immediately  prior to the Merger
Effective  Date  shall be the  directors  of the  Surviving  Corporation  in the
Merger,  each to hold office until his or her successor is elected and qualified
or otherwise in accordance with the Certificate of  Incorporation  and Bylaws of
the Surviving Corporation.

                  (iv) On the Merger  Effective  Date,  the  officers  of Oneida
Merger Corp.  duly elected and holding  office  immediately  prior to the Merger
Effective Date shall be the officers of the Surviving Corporation in the Merger,
each to hold  office  until his or her  successor  is elected and  qualified  or
otherwise in accordance with the Certificate of Incorporation  and the Bylaws of
the Surviving Corporation.

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         (b)  Notwithstanding  any provision of this  Agreement to the contrary,
Oneida Financial may elect, subject to the filing of all necessary  applications
and the receipt of all required regulatory approvals, to modify the structure of
the  transactions  contemplated  hereby,  and the parties  shall enter into such
alternative  transactions  to effect the Merger,  provided that (i) there are no
adverse tax  consequences to any of the  stockholders of VBC as a result of such
modification,  (ii) the Merger  Consideration  is not thereby changed in kind or
reduced in amount because of such modification, (iii) such modification will not
be likely to materially delay or jeopardize  receipt of any required  regulatory
approvals  or  the  consummation  of  the  transactions   contemplated  by  this
Agreement,  and (iv) it does not result in any representation or warranty of any
party set forth in this Agreement becoming incorrect in any material respect.

         Section 2.02      Conversion of Shares

         On the Merger  Effective  Date, by virtue of the Merger and without any
action on the part of VBC or the holders of shares of VBC Common Stock:

         (i) Each  outstanding  share of VBC Common Stock issued and outstanding
on the Merger Effective Date, except as provided in clauses (ii) and (v) of this
Section,  shall  cease to be  outstanding,  shall  cease to exist  and  shall be
converted into the right to receive $54.00 in cash,  without interest  (referred
to as the "Merger Consideration").

         (ii) Any shares of VBC Common  Stock  which are owned or held by either
party hereto or any of their respective  Subsidiaries (other than in a fiduciary
capacity  or in  connection  with  debts  previously  contracted)  on the Merger
Effective Date shall cease to exist,  the  certificates for such shares shall as
promptly as practicable be canceled, such shares shall not be converted into the
Merger Consideration, and no cash or shares of capital stock of Oneida Financial
shall be issued or exchanged therefor.

         (iii)  Each  share of Oneida  Merger  Corp.  common  stock  issued  and
outstanding immediately before the Merger Effective Date shall be converted into
and become an outstanding share of the surviving corporation.

         (iv) The  holders  of  certificates  representing  shares of VBC Common
Stock (any such certificate  being  hereinafter  referred to as a "Certificate")
shall cease to have any rights as stockholders  of VBC,  except such rights,  if
any, as they may have pursuant to this Agreement or applicable law.

         (v) Following the Merger  Effective Date, the Surviving  Corporation or
Oneida Savings shall pay for any  dissenters'  shares in accordance with Section
623 of the NYBCL,  provided  that if appraisal  rights under  Section 910 of the
NYBCL  with  respect  to any  dissenters'  shares  shall  have been  effectively
withdrawn or lost,  such shares will only be entitled to be  converted  into the
right to receive the Merger Consideration.

                                       11
<PAGE>

         Section 2.03      Exchange Procedures

         (a) Immediately  prior to the Merger  Effective Date,  Oneida Financial
shall cause to be  deposited  with  Registrar  and  Transfer  Company or another
entity experienced in serving as an exchange agent (the "Exchange  Agent"),  for
exchange in accordance with this Article II, cash equal to the aggregate  Merger
Consideration,  by wire transfer of immediately  available funds, into which the
outstanding  shares of VBC common  stock  shall be  converted  pursuant  to this
Agreement.  As promptly as practicable and in any event within ten (10) calendar
days after the Merger Effective Date,  Oneida Financial shall cause the Exchange
Agent to mail to each holder of record of an  outstanding  share  Certificate or
Certificates a Letter of Transmittal  containing  instructions for the surrender
of the  Certificate or  Certificates  held by such holder for payment  therefor.
Upon  surrender of the  Certificate  or  Certificates  to the Exchange  Agent in
accordance with the  instructions  set forth in the Letter of Transmittal,  such
holder shall  promptly  receive in exchange  therefor the Merger  Consideration,
without  interest  thereon.  The Exchange Agent shall send payments within three
(3) business  days after the receipt of properly  submitted  documents.  Neither
Oneida Financial nor the Exchange Agent shall be obligated to deliver the Merger
Consideration  to a former  stockholder  of VBC until  such  former  stockholder
surrenders  his  Certificate  or  Certificates  or,  in lieu  thereof,  any such
appropriate  affidavit  of  loss  and  indemnity  agreement  and  bond as may be
reasonably required by Oneida Financial.

         (b) If payment of the  Merger  Consideration  is to be made to a person
other  than the  person in whose  name a  Certificate  surrendered  in  exchange
therefor is registered,  it shall be a condition of payment that the Certificate
so  surrendered  shall be properly  endorsed (or  accompanied  by an appropriate
instrument of transfer) and otherwise in proper form for transfer,  and that the
person requesting such payment shall pay any transfer or other taxes required by
reason  of the  payment  to a person  other  than the  registered  holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the  satisfaction  of the  Exchange  Agent that such tax has been paid or is not
payable.

         (c) The payment of the Merger  Consideration upon the conversion of VBC
Common Stock in accordance  with the above terms and conditions  shall be deemed
to be paid in full  satisfaction  of all  rights  pertaining  to such VBC Common
Stock.

         (d) Promptly  following  the date which is twelve (12) months after the
Merger  Effective Date, the Exchange Agent shall deliver to Oneida Financial all
cash,  certificates  and  other  documents  in its  possession  relating  to the
transactions described in this Agreement,  and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing shares
of VBC Common Stock may  surrender  such  Certificate  to Oneida  Financial  and
(subject to applicable abandoned property,  escheat and similar laws) receive in
consideration  therefor  the Merger  Consideration  multiplied  by the number of
shares of VBC Common Stock formerly represented by such Certificate, without any
interest or dividends thereon.

         (e)  After  the  Closing,  there  shall be no  transfers  on the  stock
transfer books of VBC of the shares of VBC Common Stock,  which are  outstanding
immediately  prior to the Merger,  and the stock  transfer books of VBC shall be
closed  with  respect  to such  shares.  If,  after the Merger  Effective  Date,
Certificates representing such shares are presented for transfer to the

                                       12
<PAGE>

Exchange   Agent,   they  shall  be  canceled  and   exchanged  for  the  Merger
Consideration as provided in this Article II.

         (f) In the event any  certificate  for VBC Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall deliver (except as otherwise
provided  in Section  2.02(v)) in exchange  for such lost,  stolen or  destroyed
Certificate,  upon the making of an affidavit of the fact by the holder thereof,
the cash to be paid in the Merger as  provided  for herein;  provided,  however,
that Oneida  Financial may, in its sole discretion and as a condition  precedent
to the  delivery  thereof,  require the owner of such lost,  stolen or destroyed
Certificate  to deliver a bond in such  reasonable  sum as Oneida  Financial may
request as  indemnity  against any claim that may be made  against  VBC,  Oneida
Financial  or any other party with  respect to the  Certificate  alleged to have
been lost, stolen or destroyed.

         (g) Oneida Financial is hereby authorized to adopt additional rules and
regulations  with  respect to the matters  referred to in this  Section 2.03 not
inconsistent with the provisions of this Agreement.

         Section 2.04      Closing

         The Closing of the Merger  shall take place on the Closing  Date at the
executive  offices of Oneida  Savings,  or such other  location as determined by
Oneida Financial and Oneida Savings.

        ARTICLE III-REPRESENTATIONS AND WARRANTIES OF VBC AND VERNON BANK

         VBC and Vernon  Bank  represent  and  warrant to Oneida  Financial  and
Oneida Savings that the statements contained in this Article III are correct and
complete as of the date of this Agreement and will be correct and complete as of
the  Closing  Date (as  though  made then and as though  the  Closing  Date were
substituted for the date of this Agreement  throughout this Article III), except
as set forth in a VBC DISCLOSURE  SCHEDULE.  VBC has made a good faith effort to
ensure that the  disclosure  on each  schedule of the VBC  DISCLOSURE  SCHEDULES
corresponds to the section reference herein.

         Section 3.01      Organization.

         (a) VBC is a corporation  duly organized,  validly existing and in good
standing  under the laws of the State of New York,  and is duly  registered as a
bank holding  company under the BHCA. VBC has full corporate power and authority
to carry on its business as now  conducted  and is duly licensed or qualified to
do business in the states of the United States and foreign  jurisdictions  where
its  ownership  or leasing of property or the conduct of its  business  requires
such  qualification,  except  where the failure to be so  licensed or  qualified
would not have a Material Adverse Effect on VBC.

         (b) Vernon Bank is a national  bank duly  organized,  validly  existing
and, except as set forth in the VBC DISCLOSURE SCHEDULES, in good standing under
the  laws  of the  United  States  of  America.  Vernon  Bank  is the  only  VBC
Subsidiary.  The deposits of Vernon

                                       13
<PAGE>

Bank are insured by the FDIC through the DIF to the fullest extent  permitted by
law,  and all  premiums  and  assessments  required  to be  paid  in  connection
therewith  have been paid when due by Vernon  Bank.  As of the date  hereof,  no
proceedings  for the  revocation  of such  deposit  insurance  are  pending,  or
expressly  threatened.  VBC has heretofore made available to Oneida  Financial a
complete  and correct copy of the  certificate  of  incorporation  and bylaws or
comparable organizational documents, each as amended to the date hereof, of each
of VBC and its Subsidiaries.

         (c) Vernon  Bank is a member in good  standing  of the FHLB of New York
and owns the requisite amount of stock therein.

         (d)  The  respective  minute  books  of VBC  and  each  VBC  Subsidiary
accurately record, in all material  respects,  all material corporate actions of
their  respective  stockholders and boards of directors  (including  committees)
through the date of this Agreement.

         (e) VBC owns, directly or indirectly, all of the issued and outstanding
equity  securities  of each  Subsidiary.  There are no  contracts,  commitments,
understandings  or arrangements  by which any of such  Subsidiaries is or may be
bound to sell or otherwise  transfer any shares of its equity  securities (other
than  to VBC or a  wholly-owned  Subsidiary  of  it).  There  are no  contracts,
commitments, understandings, or arrangements relating to VBC's rights to vote or
to  dispose  of such  securities.  All of the  equity  securities  of each  such
Subsidiary  held by VBC  are  fully  paid  and  nonassessable,  not  subject  to
preemptive or similar rights and are owned by VBC free and clear of any liens.

         (f) Each of VBC's  Subsidiaries  has been duly  organized and qualified
under the laws of the  jurisdiction of its organization and is duly qualified to
do business and in good  standing in the  jurisdictions  where its  ownership or
leasing  of  property  or the  conduct  of  its  business  requires  it to be so
qualified, except where the failure to be so qualified would not have a Material
Adverse Effect.

         Section 3.02      Capitalization.

         (a) The  authorized  capital stock of VBC consists of 300,000 shares of
Common Stock,  $5.00 par value per share ("VBC Common Stock"),  and no shares of
preferred stock. There are 210,447 shares of VBC Common Stock validly issued and
outstanding, all of which are fully paid and non-assessable. There are no shares
of VBC  preferred  stock  issued  and  outstanding.  Neither  VBC  nor  any  VBC
Subsidiary  has or is  bound  by any  Right  of any  character  relating  to the
purchase,  sale or issuance or voting of, or right to receive dividends or other
distributions  on, any shares of VBC Common Stock,  or any other security of VBC
or any securities  representing the right to vote, purchase or otherwise receive
any shares of VBC Common Stock or any other  security of VBC. VBC has granted no
other rights through an option,  warrant,  or other  derivative  instrument,  to
acquire VBC Common Stock.

         (b) VBC owns all of the capital  stock of Vernon Bank free and clear of
any lien or encumbrance.  Except for the VBC  Subsidiaries,  and as set forth in
VBC DISCLOSURE SCHEDULE 3.02(b),  VBC does not possess,  directly or indirectly,
any material equity  interest in

                                       14
<PAGE>

any corporation,  except for equity interests held in the investment  portfolios
of VBC and the VBC Subsidiaries,  equity interests held by VBC Subsidiaries in a
fiduciary  capacity,  and equity  interests held in connection  with the lending
activities  of VBC  Subsidiaries.  Except  as  disclosed  in the VBC  DISCLOSURE
SCHEDULE  3.02(b),  all the  outstanding  shares  of  capital  stock of each VBC
Subsidiary are validly issued,  fully paid and  non-assessable  and are owned by
VBC or by a VBC Subsidiary,  free and clear of any liens.  There are no existing
options,  warrants,  calls or other  rights,  agreements or  commitments  of any
character  relating to the sale,  issuance or voting of any shares of the issued
or unissued capital stock of any VBC Subsidiary which have been issued,  granted
or entered into by VBC or any VBC Subsidiary.

         (c) No Person or "group"  (as that term is used in Section  13(d)(3) of
the Exchange Act), is the  beneficial  owner (as defined in Section 13(d) of the
Exchange  Act) of 5% or more of the  outstanding  shares  of VBC  Common  Stock,
except as disclosed in the VBC DISCLOSURE SCHEDULE 3.02(c).

         Section 3.03      Authority; No Violation.

         (a) VBC and Vernon Bank each has full corporate  power and authority to
execute and deliver this Agreement  and,  subject to a favorable vote of the VBC
stockholders  and  receipt  of  all  Regulatory  Approvals,  to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
by VBC  and  Vernon  Bank  and the  completion  by VBC  and  Vernon  Bank of the
transactions  contemplated  hereby  have been duly and  validly  approved by the
Boards of  Directors  of VBC and Vernon  Bank and,  except for  approval  of the
stockholders  of VBC,  no  other  corporate  proceedings  on the part of VBC and
Vernon Bank are necessary to complete the transactions contemplated hereby. This
Agreement  has been duly and validly  executed  and  delivered by VBC and Vernon
Bank and,  subject to  approval  by the  stockholders  of VBC and receipt of the
required approvals of Regulatory  Authorities  described in Section 4.03 hereof,
constitutes the valid and binding obligation of VBC and Vernon Bank, enforceable
against VBC and Vernon Bank in accordance with its terms,  subject to applicable
bankruptcy,  insolvency and similar laws affecting  creditors' rights generally,
and as to Vernon Bank, the  conservatorship  or  receivership  provisions of the
FDIA, and subject, as to enforceability, to general principles of equity.

         (b) The  execution  and  delivery of this  Agreement  by VBC and Vernon
Bank, subject to receipt of approvals from the Regulatory  Authorities  referred
to in Section 4.03 hereof and VBC's and Oneida  Financial's  compliance with any
conditions contained therein, the consummation of the transactions  contemplated
hereby,  and  compliance  by VBC  and  Vernon  Bank  with  any of the  terms  or
provisions  hereof  will  not:  (i)  conflict  with or result in a breach of any
provision of the  certificate of  incorporation  or bylaws of VBC or the charter
and bylaws of Vernon  Bank;  (ii) violate any statute,  code,  ordinance,  rule,
regulation,  judgment,  order,  writ, decree or injunction  applicable to VBC or
Vernon Bank or any of their respective  properties or assets;  or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event  which,  with  notice or lapse of time,  or both,  would  constitute  a
default)  under,  result  in the  termination  of,  accelerate  the  performance
required by, or result in a right of termination or acceleration or the creation
of any lien,  security  interest,  charge or other  encumbrance  upon any of the
properties or assets of VBC or Vernon Bank,  under any of the terms,  conditions
or

                                       15
<PAGE>

provisions  of any note,  bond,  mortgage,  indenture,  deed of trust,  license,
lease,  agreement or other investment or obligation to which VBC or Vernon Bank,
is a party, or by which they or any of their respective properties or assets may
be bound or affected.

         Section 3.04      Consents

         Except for the consents,  waivers,  approvals, and filings from or with
the  Regulatory  Authorities  referred to in Section 4.03 hereof and  compliance
with any conditions contained therein, and the approval of this Agreement by the
requisite vote of the stockholders of VBC, no consents, waivers or approvals of,
or filings or registrations with, any governmental  authority are necessary.  No
consents,  waivers or approvals of, or filings or registrations  with, any other
third parties are necessary in connection with (a) the execution and delivery of
this  Agreement by VBC and Vernon Bank,  and (b) the completion by VBC or Vernon
Bank of the transactions  contemplated  hereby.  Neither VBC nor Vernon Bank has
any  Knowledge or reason to believe that (i) any required  consents or approvals
including Regulatory Approvals will not be received,  or (ii) any public body or
authority,  the consent or approval of which is not  required or any filing with
which  is not  required,  will  object  to the  completion  of the  transactions
contemplated by this Agreement.

         Section 3.05      Regulatory Reports; Financial Statements

         (a) VBC has previously delivered to Oneida Financial the VBC Regulatory
Reports.  The VBC  Regulatory  Reports have been,  and will be,  prepared in all
material respects in accordance with applicable regulatory accounting principles
and practices  throughout  the periods  covered by such  statements,  and fairly
present,  and will fairly  present in all material  respects,  the  consolidated
financial position, results of operations and changes in stockholders' equity of
VBC as of and for the periods ended on the dates  thereof,  in  accordance  with
applicable regulatory accounting principles applied on a consistent basis.

         (b)  VBC  has  previously   delivered  to  Oneida   Financial  the  VBC
Financials.  The VBC Financials  have been, and will be,  prepared in accordance
with GAAP, and (including the related notes where applicable) fairly present, or
will fairly present,  in each case in all material respects (subject in the case
of the  unaudited  interim  statements  to  normal  year-end  adjustments),  the
consolidated financial position, results of operations and cash flows of VBC and
the VBC  Subsidiaries  as of and for the respective  periods ending on the dates
thereof,  in  accordance  with GAAP  applied on a  consistent  basis  during the
periods  involved,  except as indicated in the notes thereto,  or in the case of
unaudited  statements,  to normal recurring audit adjustments and the absence of
footnotes.

         (c) At the date of each balance sheet included in the VBC Financials or
the VBC Regulatory Reports, VBC did not have, and will not have any liabilities,
obligations or loss  contingencies  of any nature  (whether  absolute,  accrued,
contingent  or  otherwise)  of a type  required  to be  reflected  in  such  VBC
Financials or VBC Regulatory  Reports or in the footnotes  thereto which are not
fully  reflected or reserved  against  therein or fully  disclosed in a footnote
thereto,  except for liabilities,  obligations and loss contingencies  which are
not  material  individually  or in the  aggregate  and which are incurred in the
ordinary  course of  business,

                                       16
<PAGE>

consistent with past practice and except for  liabilities,  obligations and loss
contingencies  which are within the subject matter of a specific  representation
and warranty  herein and subject,  in the case of any unaudited  statements,  to
normal, recurring audit adjustments and the absence of footnotes.

         (d) VBC and Vernon Bank have filed all VBC Regulatory Reports, together
with any amendments required to be made with respect thereto, that were required
to be filed.

         Section 3.06      Taxes

         VBC and the VBC  Subsidiaries  are members of the same affiliated group
within the meaning of IRC Section 1504(a). VBC has duly filed all federal, state
and  material  local tax returns  required to be filed by or with respect to VBC
and all VBC Subsidiaries on or prior to the Closing Date (all such returns being
accurate and correct in all material respects) and has duly paid or will pay, or
made or will make, provisions for the payment of all material federal, state and
local taxes which have been incurred by or are due or claimed to be due from VBC
and any VBC  Subsidiary  by any taxing  authority or pursuant to any written tax
sharing  agreement  on or prior to the  Closing  Date  other than taxes or other
charges which (i) are not delinquent, (ii) are being contested in good faith, or
(iii)  have not yet been  fully  determined.  As of the date of this  Agreement,
there is no audit  examination,  deficiency  assessment,  tax  investigation  or
refund litigation with respect to any taxes of VBC or any VBC Subsidiary, and no
claim  has been made by any  authority  in a  jurisdiction  where VBC or any VBC
Subsidiary  does not file tax returns that VBC or any VBC  Subsidiary is subject
to taxation in that jurisdiction.  VBC and each VBC Subsidiary have not executed
an  extension  or waiver of any  statute of  limitations  on the  assessment  or
collection of any material tax due that is currently in effect. VBC and each VBC
Subsidiary  has withheld and paid all taxes  required to have been  withheld and
paid in  connection  with  amounts  paid or owing to any  employee,  independent
contractor,  creditor,  stockholder  or other third party,  and VBC and each VBC
Subsidiary  has  timely  complied  with  all  applicable  information  reporting
requirements under Part III,  Subchapter A of Chapter 61 of the Code and similar
applicable state and local  information  reporting  requirements in all material
respects.

         Section 3.07      No Material Adverse Effect

         Except as set forth in VBC  DISCLOSURE  SCHEDULE  3.07, VBC and the VBC
Subsidiaries,  taken as a whole,  have not suffered any Material  Adverse Effect
since December 31, 2005.

         Section 3.08      Contracts

         (a) Except as set forth in VBC DISCLOSURE SCHEDULE 3.08(a), neither VBC
nor  any VBC  Subsidiary  is a  party  to or  subject  to:  (i) any  employment,
consulting  or  severance  contract  or  material  arrangement  with any past or
present officer,  director or employee of VBC or any VBC Subsidiary,  except for
"at  will"  arrangements;  (ii)  any  plan,  material  arrangement  or  contract
providing for bonuses,  pensions,  options,  deferred  compensation,  retirement
payments,  profit sharing or similar material  arrangements for or with any past
or present officers,  directors or employees of VBC or any VBC Subsidiary; (iii)
any collective  bargaining  agreement with any

                                       17
<PAGE>

labor  union  relating  to  employees  of VBC or any VBC  Subsidiary;  (iv)  any
agreement  which by its terms  limits the payment of  dividends  by VBC; (v) any
instrument  evidencing or related to material  indebtedness  for borrowed  money
whether directly or indirectly, by way of purchase money obligation, conditional
sale, lease purchase,  guaranty or otherwise, in respect of which VBC or any VBC
Subsidiary is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits,  repurchase agreements,  bankers' acceptances,
and  "treasury  tax and loan"  accounts  established  in the ordinary  course of
business  and  transactions  in  "federal  funds"  or which  contains  financial
covenants  or other  restrictions  (other than those  relating to the payment of
principal  and  interest  when due) which  would be  applicable  on or after the
Closing Date to Oneida  Financial or any Oneida Financial  Subsidiary;  (vi) any
agreement,  written or oral,  that  obligates VBC or any VBC  Subsidiary for the
payment of more than  $15,000  annually;  (vii) any  contract  (other  than this
Agreement)  limiting the freedom,  in any  material  respect,  of VBC or any VBC
Subsidiary,  to engage in any type of banking or bank-related business which VBC
or any VBC Subsidiary,  is permitted to engage in under applicable law as of the
date  of  this  Agreement;  or  (viii)  any  agreement,  contract,  arrangement,
commitment  or  understanding  (whether  written  or oral)  that is a  "material
contract"  within the meaning of Item  601(b)(10)  of the SEC's  Regulation  S-K
(assuming such provisions were applicable to VBC).

         (b)  True  and  correct   copies  of  agreements,   plans,   contracts,
arrangements and instruments referred to in Section 3.08(a),  have been provided
to Oneida  Financial on or before the date hereof,  are listed on VBC DISCLOSURE
SCHEDULE 3.08(a) and are in full force and effect on the date hereof and neither
VBC nor any VBC Subsidiary (nor, to the knowledge of VBC, any other party to any
such contract,  plan,  arrangement or  instrument)  has materially  breached any
provision  of, or is in  default  in any  respect  under  any term of,  any such
contract,  plan,  arrangement  or  instrument.  Except  as set  forth in the VBC
DISCLOSURE  SCHEDULE  3.08(b),   no  party  to  any  material  contract,   plan,
arrangement  or  instrument  will have the right to terminate  any or all of the
provisions of any such contract,  plan, arrangement or instrument as a result of
the execution of, and the transactions  contemplated by, this Agreement. None of
the  employees  (including  officers) of VBC,  possesses  the right to terminate
his/her  employment  as a result of the  execution of this  Agreement.  No plan,
contract,  employment agreement,  termination agreement, or similar agreement or
arrangement  to which VBC or any VBC Subsidiary is a party or under which VBC or
any VBC  Subsidiary  may be liable  contains  any  provision  which  permits  an
employee or independent contractor to terminate it without cause and continue to
accrue  future  benefits  thereunder.  Except  as set  forth  in VBC  DISCLOSURE
SCHEDULE 3.08(b), no such agreement, plan, contract, or arrangement (x) provides
for  acceleration in the vesting of benefits or payments due thereunder upon the
occurrence  of a change in  ownership  or control  of VBC or any VBC  Subsidiary
absent the  occurrence  of a  subsequent  event;  or (y) requires VBC or any VBC
Subsidiary to provide a benefit in the form of VBC Common Stock or determined by
reference  to the  value  of VBC  Common  Stock.  No  such  agreement,  plan  or
arrangement with respect to officers or directors of VBC, or to VBC's knowledge,
to its employees,  provides for benefits  which will cause an "excess  parachute
payment" or the disallowance of a federal income tax deduction under IRC Section
280G.

                                       18
<PAGE>

         Section 3.09      Ownership of Property; Insurance Coverage

         (a) Except as set forth in VBC DISCLOSURE SCHEDULE 3.09(a), VBC and the
VBC  Subsidiaries  have good and, as to real property,  marketable  title to all
material assets and properties owned by VBC or any VBC Subsidiary in the conduct
of their  businesses,  whether such assets and  properties are real or personal,
tangible or intangible,  including assets and property  reflected in the balance
sheets  contained in the VBC  Regulatory  Reports and in the VBC  Financials  or
acquired  subsequent  thereto  (except  to  the  extent  that  such  assets  and
properties have been disposed of in the ordinary  course of business,  since the
date of such  balance  sheets),  subject  to no  material  encumbrances,  liens,
mortgages,  security  interests or pledges,  except (i) those items which secure
liabilities for public or statutory  obligations or any discount with, borrowing
from or other obligations to the FHLB of New York, inter-bank credit facilities,
or any  transaction  by Vernon  Bank acting in a  fiduciary  capacity,  and (ii)
statutory  liens for amounts not yet delinquent or which are being  contested in
good faith. VBC and the VBC Subsidiaries,  as lessee, have the right under valid
and subsisting leases of real and material  personal  properties used by VBC and
the VBC  Subsidiaries  in the conduct of their  businesses  to occupy or use all
such leased  properties  as presently  occupied  and used by each of them.  Such
existing leases and commitments to lease constitute or will constitute operating
leases for both tax and financial  accounting purposes and the lease expense and
minimum rental commitments with respect to such leases and lease commitments are
as disclosed in the notes to the VBC Financials.

         (b) With  respect to all material  agreements  pursuant to which VBC or
any VBC Subsidiary has purchased  securities  subject to an agreement to resell,
if any, VBC or such VBC  Subsidiary,  as the case may be, has a lien or security
interest  (which to VBC's  knowledge  is a valid,  perfected  first lien) in the
securities or other collateral securing the repurchase agreement,  and the value
of such collateral equals or exceeds the amount of the debt secured thereby.

         (c)  VBC  and  each  VBC  Subsidiary   currently   maintains  insurance
considered by VBC to be reasonable for their  respective  operations and similar
in scope  and  coverage  to that  customarily  maintained  by  other  businesses
similarly  engaged  in a similar  location,  in  accordance  with good  business
practice.  Except as set forth in VBC DISCLOSURE  SCHEDULE 3.09(c),  VBC has not
received  notice from any  insurance  carrier  that (i) such  insurance  will be
canceled or that  coverage  thereunder  will be reduced or  eliminated,  or (ii)
premium costs with respect to such policies of insurance  will be  substantially
increased. There are presently no material claims pending under such policies of
insurance  and no notices have been given by VBC under such  policies.  All such
insurance is valid and enforceable and in full force and effect,  and within the
last three years VBC has received  each type of insurance  coverage for which it
has applied and during such periods has not been denied  indemnification for any
material claims  submitted under any of its insurance  policies.  VBC DISCLOSURE
SCHEDULE 3.09(c) identifies all policies of insurance maintained by VBC.

                                       19
<PAGE>

         Section 3.10      Legal Proceedings

         Except as set forth in VBC DISCLOSURE  SCHEDULE  3.10,  Neither VBC nor
any VBC  Subsidiary  is a party to any, and there are no pending or, to the best
of VBC's  knowledge,  threatened  legal,  administrative,  arbitration  or other
proceedings,  claims (whether  asserted or unasserted),  actions or governmental
investigations or inquiries of any nature (i) against VBC or any VBC Subsidiary,
(ii) to which VBC or any VBC  Subsidiary's  assets are or may be subject,  (iii)
challenging the validity or propriety of any of the transactions contemplated by
this  Agreement,  or (iv) which  could  adversely  affect the  ability of VBC to
perform under this Agreement.

         Section 3.11      Compliance With Applicable Law

         (a) VBC and the VBC Subsidiaries hold all licenses, franchises, permits
and  authorizations  necessary  for  the  lawful  conduct  of  their  respective
businesses  under, and have complied in all material  respects with,  applicable
laws,  statutes,  orders,  rules or regulations  of any federal,  state or local
governmental  authority relating to them. VBC and each VBC Subsidiary,  directly
or indirectly,  owns, or are licensed or otherwise  possess legally  enforceable
rights to use, all patents,  trademarks,  trade names, service marks, copyrights
and any applications therefor,  technology,  know-how and tangible or intangible
proprietary information or material that are material to the business of VBC and
the VBC Subsidiaries.

         (b) Except as set forth in VBC DISCLOSURE SCHEDULE 3.11(b), neither VBC
nor any VBC Subsidiary has received any notification or  communication  from any
Regulatory  Authority,  nor do they have any Knowledge of facts which would form
the basis for any Regulatory  Authority to take action (i) asserting that VBC or
any VBC  Subsidiary  is not in  material  compliance  with any of the  statutes,
regulations  or  ordinances  which  such  Regulatory  Authority  enforces;  (ii)
threatening   to  revoke  any  license,   franchise,   permit  or   governmental
authorization which is material to VBC or any VBC Subsidiary; (iii) requiring or
threatening to require VBC or any VBC Subsidiary,  or indicating that VBC or any
VBC  Subsidiary  may be  required,  to  enter  into a cease  and  desist  order,
agreement or memorandum of understanding or any other agreement with any federal
or state governmental  agency or authority which is charged with the supervision
or regulation of banks or engages in the insurance of bank deposits  restricting
or limiting,  or  purporting to restrict or limit,  in any material  respect the
operations  of VBC or any  VBC  Subsidiary,  including  without  limitation  any
restriction  on the payment of  dividends;  or (iv)  directing,  restricting  or
limiting,  or  purporting  to  direct,  restrict  or limit,  in any  manner  the
operations  of VBC or any  VBC  Subsidiary,  including  without  limitation  any
restriction  on the  payment  of  dividends  (any  such  notice,  communication,
memorandum,  agreement  or  order  described  in this  sentence  is  hereinafter
referred to as a "Regulatory Agreement").  Except as set forth in VBC Disclosure
Schedule 3.11(b), neither VBC nor any VBC Subsidiary has consented to or entered
into any currently effective  Regulatory  Agreement.  The most recent regulatory
ratings  given to Vernon Bank as to compliance  with the Community  Reinvestment
Act is satisfactory or better.

                                       20
<PAGE>

         Section 3.12      ERISA/Employee Compensation

         (a) VBC DISCLOSURE  SCHEDULE 3.12(a) includes a descriptive list of all
existing  bonus,   incentive,   deferred  compensation,   pension,   retirement,
profit-sharing,  thrift, savings,  phantom stock, severance,  welfare and fringe
benefit plans,  employment,  severance and change in control  agreements and all
other benefit practices,  policies and arrangements maintained by VBC or any VBC
Subsidiary  in which any  employee  or  former  employee,  consultant  or former
consultant  or  director  or  former  director  of  VBC or  any  VBC  Subsidiary
participates or to which any such employee, consultant or director is a party or
is  otherwise  entitled  to receive  benefits  (the  "Compensation  and  Benefit
Plans").  A true and correct  copy of each  Compensation  and  Benefit  Plan has
previously been delivered to Oneida Savings.  Neither VBC nor any VBC Subsidiary
has any  commitment to create any additional  Compensation  and Benefit Plan or,
except as set forth in VBC  DISCLOSURE  SCHEDULE  3.12(a) or as provided  for in
this Agreement, to modify, change or renew any existing Compensation and Benefit
Plan.

         (b)  Each   Compensation   and  Benefit  Plan  has  been  operated  and
administered  in all  material  respects in  accordance  with its terms and with
applicable  law,  including,  but not  limited  to,  ERISA,  the  Code,  the Age
Discrimination  in  Employment  Act, and any  regulations  or rules  promulgated
thereunder, and all material filings, disclosures and notices required by ERISA,
the Code, the Age  Discrimination in Employment Act and any other applicable law
have been timely made. Each  Compensation and Benefit Plan which is an "employee
pension  benefit  plan"  within the meaning of Section 3(2) of ERISA (a "Pension
Plan") and which is intended to be qualified  under  Section  401(a) of the Code
has received a favorable determination letter from the IRS, and VBC is not aware
of any circumstances  which are reasonably likely to result in revocation of any
such favorable  determination  letter.  There is no material  pending or, to the
best knowledge of VBC,  threatened action,  suit or claim relating to any of the
Compensation and Benefit Plans (other than routine claims for benefits). Neither
VBC nor any VBC Subsidiary has engaged in a transaction,  or omitted to take any
action,  with respect to any Compensation and Benefit Plan that would reasonably
be expected to subject VBC or any VBC Subsidiary to a tax or penalty  imposed by
either  Section 4975 of the Code or Section 502 of ERISA,  assuming for purposes
of  Section  4975 of the Code that the  taxable  period of any such  transaction
expired  as of the  date  hereof  and  subsequently  expires  as of the day next
preceding the Merger Effective Date.

         (c)  Neither  VBC,  nor any  VBC  Subsidiary  or any  entity  which  is
considered  one employer with VBC under Section  4001(a)(14) of ERISA or Section
414(b) or (c) of the Code (an "ERISA  Affiliate") is a sponsor of or maintains a
defined  benefit  Pension Plan or any  Compensation  and Benefit Plan subject to
Title IV of ERISA,  or has any liability under any such plan that was previously
sponsored or  maintained by it. No notice of a  "reportable  event,"  within the
meaning of Section 4043 of ERISA for which the 30-day reporting  requirement has
not been waived,  has been required to be filed for any Compensation and Benefit
Plan or by any single employer plan of an ERISA  Affiliate (an "ERISA  Affiliate
Plan") within the 12-month period ending on the date hereof. To the knowledge of
VBC, there is no pending  investigation or enforcement  action by any Regulatory
Authority  with  respect  to any  Compensation  and  Benefit  Plan or any  ERISA
Affiliate Plan, except as set forth in VBC DISCLOSURE SCHEDULE 3.12(c).

                                       21
<PAGE>

         (d) All material  contributions  required to be made under the terms of
any  Compensation  and  Benefit  Plan or ERISA  Affiliate  Plan or any  employee
benefit  arrangements to which VBC or any VBC Subsidiary is a party or a sponsor
have been timely made, and all anticipated contributions and funding obligations
are accrued monthly on VBC's consolidated financial statements.  VBC and the VBC
Subsidiaries  have  expensed  and  accrued as a liability  the present  value of
future  benefits  under  each  applicable  Compensation  and  Benefit  Plan  for
financial  reporting  purposes  as  required by  generally  accepted  accounting
principles.  Neither  any  Pension  Plan  nor any  ERISA  Affiliate  Plan has an
"accumulated  funding deficiency"  (whether or not waived) within the meaning of
Section  412 of the Code or  Section  302 of  ERISA.  Neither  VBC,  nor any VBC
Subsidiary  or any ERISA  Affiliate  (x) has  provided,  or would  reasonably be
expected to be required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section  401(a)(29) of the Code, or (y) has taken any
action, or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a Lien under Section 412(n) of the Code
or pursuant to ERISA.

         (e) Except as set forth in VBC DISCLOSURE SCHEDULE 3.12(a), neither VBC
nor any VBC  Subsidiary  has any  obligations to provide  retiree  health,  life
insurance,  disability  insurance,  or other  retiree death  benefits  under any
Compensation and Benefit Plan, other than benefits  mandated by Section 4980B of
the  Code.  There  has  been no  communication  to  employees  by VBC or any VBC
Subsidiary  that would  reasonably  be  expected  to promise or  guarantee  such
employees retiree health, life insurance, disability insurance, or other retiree
death benefits.

         (f) Neither VBC nor any VBC Subsidiary  maintains any  Compensation and
Benefit Plans covering foreign employees.

         (g) With respect to each  Compensation and Benefit Plan, if applicable,
VBC has provided or made  available to Oneida  Savings  copies of the: (A) trust
instruments and insurance  contracts;  (B) two most recent Forms 5500 filed with
the IRS; (C) most recent actuarial report and financial statement;  (D) the most
recent summary plan description;  (E) most recent determination letter issued by
the IRS;  (F) any Form 5310 or Form 5330 filed with the IRS; and (G) most recent
nondiscrimination tests performed under ERISA and the Code (including 401(k) and
401(m) tests).

         (h)  Except  as set  forth in VBC  DISCLOSURE  SCHEDULE  3.12(h)  or as
otherwise  provided in this Agreement,  the consummation of the Merger will not,
directly  or  indirectly  (including,  without  limitation,  as a result  of any
termination  of  employment  or service at any time  prior to or  following  the
Merger  Effective Date) (A) entitle any employee,  consultant or director to any
payment or benefit  (including  severance  pay,  change in control  benefit,  or
similar compensation) or any increase in compensation, (B) result in the vesting
or acceleration of any benefits under any  Compensation  and Benefit Plan or (C)
result in any material  increase in benefits  payable under any Compensation and
Benefit Plan.

         (i) No  compensation  payable  by VBC or any VBC  Subsidiary  to any of
their employees under any  Compensation and Benefit Plan (including by reason of
the  transactions  contemplated  hereby) will be subject to  disallowance  under
Section 162(m) of the IRC.

                                       22
<PAGE>

         Section 3.13      Brokers, Finders and Financial Advisors

         Other than the engagement of Danielson  Associates,  Inc. to render its
opinion as contemplated  by Section 3.20 of this Agreement,  neither VBC nor any
VBC Subsidiary,  nor any of their respective officers,  directors,  employees or
agents, has employed any broker,  finder or financial advisor in connection with
the transactions  contemplated by this Agreement,  or, incurred any liability or
commitment for any fees or commissions to any such person in connection with the
transactions contemplated by this Agreement, which has not been reflected in the
VBC Financials.

         Section 3.14      Environmental Matters

         (a) With respect to VBC and each VBC Subsidiary:

                  (i) Each of VBC and the VBC  Subsidiaries,  the  Participation
Facilities,  and, to VBC's knowledge, the Loan Properties are, and have been, in
substantial compliance with, and are not liable under, any Environmental Laws;

                  (ii) There is no suit,  claim,  action,  demand,  executive or
administrative  order,  directive,  investigation  or proceeding  pending or, to
VBC's knowledge,  threatened,  before any court, governmental agency or board or
other forum against VBC or any VBC Subsidiary or any Participation  Facility (x)
for alleged  noncompliance  (including  by any  predecessor)  with, or liability
under, any  Environmental  Law or (y) relating to the presence of or release (as
defined  herein)  into the  environment  of any  Hazardous  Material (as defined
herein),  whether or not occurring at or on a site owned,  leased or operated by
it or any VBC Subsidiary or any Participation Facility;

                  (iii) There is no suit, claim,  action,  demand,  executive or
administrative  order,  directive,  investigation  or proceeding  pending or, to
VBC's knowledge,  threatened,  before any court, governmental agency or board or
other  forum  relating  to or  against  any  Loan  Property  (or  VBC or any VBC
Subsidiary   in  respect  of  such  Loan   Property)  (x)  relating  to  alleged
noncompliance  (including  by any  predecessor)  with, or liability  under,  any
Environmental  Law or (y)  relating  to the  presence  of or  release  into  the
environment of any Hazardous Material,  whether or not occurring at or on a site
owned, leased or operated by a Loan Property;

                  (iv) The properties  currently owned or operated by VBC or any
VBC Subsidiary  (including,  without  limitation,  soil,  groundwater or surface
water on, under or adjacent to the  properties,  and buildings  thereon) are not
contaminated with and do not otherwise contain any Hazardous Material other than
as permitted under applicable Environmental Law;

                  (v)  Neither  VBC nor  any VBC  Subsidiary  has  received  any
notice, demand letter,  executive or administrative order,  directive or request
for information from any federal, state, local or foreign governmental entity or
any third party  indicating that it may be in violation of, or liable under, any
Environmental Law;

                                       23
<PAGE>

                  (vi) There are no  underground  storage  tanks on, in or under
any  properties  owned  or  operated  by  VBC  or  any  VBC  Subsidiary  or  any
Participation  Facility,  and no  underground  storage tanks have been closed or
removed from any  properties  owned or operated by VBC or any VBC  Subsidiary or
any Participation Facility; and

                  (vii)  During  the  period  of VBC's  or any VBC  Subsidiary's
ownership or operation of any of their respective current properties or VBC's or
any  VBC  Subsidiary's  participation  in the  management  of any  Participation
Facility,  there has been no contamination by or release of Hazardous  Materials
in, on, under or affecting such  properties.  To VBC's  knowledge,  prior to the
period of (x) VBC's or any VBC  Subsidiary's  ownership  or  operation of any of
their  respective  current  properties  or (y)  VBC's  or any  VBC  Subsidiary's
participation  in the  management of any  Participation  Facility,  there was no
contamination  by or release of  Hazardous  Material  in, on, under or affecting
such properties.

         (b) "Loan  Property"  means any property in which the applicable  party
(or a Subsidiary of it) holds a security  interest,  and,  where required by the
context,  includes the owner or operator of such property, but only with respect
to such  property.  "Participation  Facility"  means any  facility  in which the
applicable  party  (or a  Subsidiary  of  it)  participates  in  the  management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context,  includes the owner or operator of such property,
but only with respect to such property.

         Section 3.15      Loan Portfolio

         (a) The allowance for possible  losses  reflected in VBC's statement of
condition at December 31, 2005 and all applicable  regulatory  requirements was,
and the  allowance  for  possible  losses  shown on the balance  sheets in VBC's
Regulatory Reports for periods ending after December 31, 2005 and all applicable
regulatory requirements will be, adequate, as of the dates thereof, under GAAP.

         (b) VBC  DISCLOSURE  SCHEDULE  3.15(b) sets forth a listing,  as of the
last practicable date prior to the date of this Agreement,  by account,  of: (A)
all loans (including loan participations) of VBC or any VBC Subsidiary that have
been  accelerated  during the past twelve  months;  (B) all loan  commitments or
lines of credit of VBC or any VBC Subsidiary  which have been  terminated by VBC
or any VBC  Subsidiary  during the past twelve  months by reason of a default or
adverse  developments  in the  condition  of the  borrower  or other  events  or
circumstances  affecting  the credit of the  borrower;  (C) all loans,  lines of
credit  and loan  commitments  as to which VBC or any VBC  Subsidiary  has given
written  notice of its intent to terminate  during the past twelve  months;  (D)
with respect to all commercial loans  (including  commercial real estate loans),
all notification  letters and other written  communications  from VBC or any VBC
Subsidiary  to any of their  respective  borrowers,  customers or other  parties
during the past twelve months wherein VBC or any VBC Subsidiary has requested or
demanded  that  actions  be  taken  to  correct  existing  defaults  or facts or
circumstances  which may become defaults;  (E) each borrower,  customer or other
party which has notified VBC or any VBC Subsidiary during the past twelve months
of, or has asserted against VBC or any VBC Subsidiary,  in each case in writing,
any "lender  liability"  or similar  claim,  and, to the  knowledge

                                       24
<PAGE>

of VBC,  each  borrower,  customer or other party which has given VBC or any VBC
Subsidiary any oral notification of, or orally asserted to or against VBC or any
VBC Subsidiary,  any such claim; (F) all loans, (1) that are contractually  past
due 90 days or more in the payment of principal and/or interest, (2) that are on
non-accrual  status, (3) that as of the date of this Agreement are classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss",  "Classified",  "Criticized",  "Watch list" or words of similar  import,
together  with the principal  amount of and accrued and unpaid  interest on each
such Loan and the  identity of the obligor  thereunder,  (4) where a  reasonable
doubt  exists  as to  the  timely  future  collectibility  of  principal  and/or
interest,  whether or not interest is still  accruing or the loans are less than
90 days past due, (5) where the interest rate terms have been reduced and/or the
maturity  dates have been extended  subsequent to the agreement  under which the
loan was originally  created due to concerns regarding the borrower's ability to
pay in  accordance  with such  initial  terms,  or (6) where a specific  reserve
allocation exists in connection therewith,  and (G) all assets classified by VBC
or any VBC Subsidiary as real estate acquired through  foreclosure or in lieu of
foreclosure, including in-substance foreclosures, and all other assets currently
held that were acquired through foreclosure or in lieu of foreclosure.

         (c) All loans  receivable  (including  discounts) and accrued  interest
entered  on the  books of VBC and each VBC  Subsidiary  arose  out of bona  fide
arm's-length transactions,  were made for good and valuable consideration in the
ordinary course of the respective  business of VBC and each VBC Subsidiary,  and
the  notes or  other  evidences  of  indebtedness  with  respect  to such  loans
(including  discounts)  are true and genuine and are what they purport to be. To
the  knowledge  of VBC and each VBC  Subsidiary,  the loans,  discounts  and the
accrued  interest  reflected  on the books of VBC and each VBC  Subsidiary,  are
subject  to  no  defenses,   set-offs  or  counterclaims   (including,   without
limitation,  those afforded by usury or truth-in-lending laws), except as may be
provided by bankruptcy,  insolvency or similar laws affecting  creditors' rights
generally or by general principles of equity. All such loans are owned by VBC or
each VBC Subsidiary, free and clear of any Liens.

         (d) The notes and other evidences of indebtedness  evidencing the loans
described in clause (c) above,  and all pledges,  mortgages,  deeds of trust and
other collateral  documents or security instruments relating thereto are, in all
material respects, valid, true and genuine, and what they purport to be.

         (e) VBC DISCLOSURE  SCHEDULE 3.15(e) sets forth by category the amounts
of all loans, leases, advances, credit enhancements, other extensions of credit,
commitments  and  interest-earning  assets of VBC, and each VBC Subsidiary  that
have been  classified  (whether  regulatory  or internal) as "Special  Mention,"
"Substandard,"  "Doubtful,"  "Loss" or words of similar import, and VBC and each
VBC Subsidiary shall promptly after the end of any month inform Oneida Financial
of any such classification  arrived at any time after the date hereof. The other
real estate owned ("OREO") included in any non-performing  assets of VBC, or any
VBC  Subsidiary  is carried  net of reserves at the lower of cost or fair value,
less  estimated  selling  costs,  based on  current  independent  appraisals  or
evaluations or current management appraisals or evaluations;  provided, however,
that "current" shall mean within the past twelve (12) months.

                                       25
<PAGE>

         Section 3.16      Related Party Transactions

         Except as disclosed in VBC DISCLOSURE  SCHEDULE  3.16,  neither VBC nor
Vernon Bank is a party to any  transaction  (including  any loan or other credit
accommodation) with any Affiliate of VBC. All such transactions (a) were made in
the ordinary course of business,  (b) were made on substantially the same terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable  transactions  with other Persons,  and (c) did not involve more than
the normal risk of collectability or present other unfavorable features. No loan
or credit  accommodation  to any  Affiliate  of VBC is  presently in default or,
during the three year period  prior to the date of this  Agreement,  has been in
default  or has  been  restructured,  modified  or  extended.  VBC has not  been
notified  that  principal  and  interest  with respect to any such loan or other
credit  accommodation  will  not  be  paid  when  due or  that  the  loan  grade
classification   accorded   such  loan  or  credit   accommodation   by  VBC  is
inappropriate.

         Section 3.17      Schedule of Termination Benefits

         VBC  DISCLOSURE  SCHEDULE 3.17  includes a schedule of all  termination
benefits  and  related  payments  that  would  be  payable  to  the  individuals
identified  thereon,  granted to such individuals,  under any and all employment
agreements,  special termination  agreements,  supplemental executive retirement
plans,  deferred bonus plans,  deferred  compensation plans, salary continuation
plans,  or any  compensation  arrangement,  or other pension  benefit or welfare
benefit plan  maintained by VBC or any VBC Subsidiary  solely for the benefit of
officers or directors of VBC or any VBC Subsidiary  (the  "Benefits  Schedule"),
assuming their employment or service is terminated as of January 2, 2007 and the
Closing Date occurs immediately prior to such termination.  No other individuals
are entitled to benefits under any such plans.

         Section 3.18      Deposits

         None of the  deposits  of VBC or any  VBC  Subsidiary  is a  "brokered"
deposit as defined in 12 CFR 337.6(a)(2).

         Section 3.19      Antitakeover Provisions Inapplicable; Required Vote
of Stockholders

         Except as set forth on VBC  DISCLOSURE  SCHEDULE  3.19,  and except for
approvals  required under the federal and state banking laws,  the  transactions
contemplated by this Agreement are not subject to any applicable  state takeover
law.  The  affirmative  vote of the  holders  of  two-thirds  of the  issued and
outstanding  shares of VBC common stock entitled to vote is necessary to approve
this Agreement and the transactions contemplated hereby.

         Section 3.20      Fairness Opinion

         VBC has received an opinion from  Danielson  Associates,  Inc. , to the
effect  that,  subject to the terms,  conditions  and  qualifications  set forth
therein, as of the date thereof,  the Merger Consideration to be received by the
stockholders of VBC pursuant to this Agreement is fair to such stockholders from
a financial  point of view. Such opinion has not been amended or rescinded as of
the date of this Agreement.

                                       26
<PAGE>

         Section 3.21      Administration of Fiduciary Accounts

         VBC and each VBC Subsidiary has properly  administered all accounts for
which it acts as a fiduciary  including,  but not limited to, accounts for which
it serves as  trustee,  agent,  custodian,  personal  representative,  guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents  and  applicable  laws and  regulations,  except  for  failures  to so
administer  which would not have a Material  Adverse Effect on the VBC.  Neither
VBC nor any VBC Subsidiary,  nor any of their respective directors,  officers or
employees,  has committed any breach of trust with respect to any such fiduciary
account and the records for each such fiduciary account,  except for breaches of
trust and failures to maintain  records which would not,  individually or in the
aggregate, have a Material Adverse Effect on VBC.

         Section 3.22      Derivative Transactions

         All material  interest rate swaps,  caps,  floors,  option  agreements,
futures and forward  contracts and other similar risk  management  arrangements,
whether entered into for VBC's own account, or for the account of one or more of
VBC's  Subsidiaries  or  their  customers  (all of  which  are set  forth in VBC
DISCLOSURE SCHEDULE 3.22), were entered into in accordance with prudent business
practices and in all material  respects in compliance with all applicable  laws,
rules,  regulations and regulatory policies and with counterparties  believed to
be financially  responsible at the time; and each of them  constitutes the valid
and  legally  binding  obligation  of VBC or a VBC  Subsidiary,  enforceable  in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium,  fraudulent  transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles),  and is in full force and effect.  Neither VBC
nor any VBC Subsidiary,  nor to the Knowledge of VBC any other party thereto, is
in breach of any of its  obligations  under any such agreement or arrangement in
any material respect.

         Section 3.23      Information in the Proxy Statement

         VBC represents and warrants that the Proxy  Statement will not,  either
at the  time it is  mailed  to the VBC  Stockholders  or at the  time of the VBC
stockholders meeting, contain any untrue statement of a material fact or omit to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances in which they were made, not
misleading; provided, however, no representation or warranty is made hereby with
respect to information  supplied or required to be supplied by Oneida  Financial
for inclusion in the proxy statement.

         Section 3.24      Good Faith

         Neither  VBC or any VBC  Subsidiary  has  taken or  agreed  to take any
action or has any knowledge of any fact or  circumstance  that would (i) prevent
the transactions  contemplated hereby from qualifying as a reorganization within
the  meaning  of Section  368 of the Code,  or (ii)  materially  impede or delay
receipt of any approval from any regulatory authority or the consummation of the
transactions contemplated by this Agreement.

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<PAGE>

         Section 3.25      Community Reinvestment Act Compliance.

         Vernon Bank is in material compliance with the applicable provisions of
the  Community  Reinvestment  Act (the  "CRA") and the  regulations  promulgated
thereunder  except  where  the  failure  to be in  compliance  would  not have a
Material  Adverse  Effect on VBC, and Vernon Bank  currently has a CRA rating of
satisfactory  or  better.  To  the  knowledge  of  VBC,  there  is  no  fact  or
circumstance  or set of facts or  circumstances  that would cause Vernon Bank to
fail to comply  with such  provisions  or cause the CRA rating of Vernon Bank to
fall below satisfactory.

         Section 3.26      Anti-Money Laundering Compliance.

         Vernon Bank maintains an effective anti-money laundering program and is
in  compliance  in all  material  respects  with  federal  laws and  regulations
relating to such anti-money laundering program.

          ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF ONEIDA FINANCIAL

         Oneida  Financial  represents  and warrants to VBC that the  statements
contained  in this  Article IV are correct  and  complete as of the date of this
Agreement  and will be correct and  complete  as of the Closing  Date (as though
made then and as though the Closing Date were  substituted  for the date of this
Agreement  throughout  this  Article  IV),  except  as set  forth in the  ONEIDA
FINANCIAL  DISCLOSURE SCHEDULES delivered by Oneida Financial to VBC on the date
hereof.  Oneida  Financial  has made a good  faith  effort  to  ensure  that the
disclosure  on  each  schedule  of the  ONEIDA  FINANCIAL  DISCLOSURE  SCHEDULES
corresponds to the section reference herein.

         Section 4.01      Organization

         (a) Oneida Financial is a corporation duly organized,  validly existing
and in good standing under the laws of the United States of America, and is duly
registered  as a  savings  and loan  holding  company  under  the  HOLA.  Oneida
Financial has full corporate power and authority to carry on its business as now
conducted  and is duly licensed or qualified to do business in the states of the
United  States  and  foreign  jurisdictions  where its  ownership  or leasing of
property or the conduct of its  business  requires  such  qualification,  except
where the  failure  to be so  licensed  or  qualified  would not have a Material
Adverse Effect on Oneida Financial.

         (b) Oneida  Savings is a stock  savings  bank duly  organized,  validly
existing  and in good  standing  under the laws of the State of New York.  State
Bank is a stock bank duly organized, validly existing and in good standing under
the laws of the State of New York. The deposits of Oneida Savings and State Bank
are insured by the FDIC through the DIF to the fullest extent  permitted by law,
and all premiums and  assessments  required to be paid in  connection  therewith
have been paid when due by Oneida Savings and State Bank.

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<PAGE>

         (c) Oneida  Financial owns all of the capital stock of Oneida  Savings,
and Oneida  Savings owns all of the capital  stock of State Bank,  in each case,
free and clear of any lien or encumbrance.

         (d) Oneida  Merger  Corp.,  at the  Merger  Effective  Date,  will be a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York. At the Merger Effective Date, Oneida Savings will have
received all requisite  approvals of government  authorities  to own, and Oneida
Savings will own, all of the outstanding capital stock of Oneida Merger Corp.

         Section 4.02      Authority; No Violation

         (a) Each of Oneida  Financial  and Oneida  Savings  has full  corporate
power and authority to execute and deliver this  Agreement and to consummate the
transactions  contemplated  hereby. The execution and delivery of this Agreement
by Oneida  Financial and Oneida Savings and the  completion by Oneida  Financial
and Oneida Savings of the  transactions  contemplated  hereby have been duly and
validly  approved  by the Board of  Directors  of Oneida  Financial  and  Oneida
Savings,  respectively, and no other corporate proceedings on the part of Oneida
Financial  and  Oneida  Savings  are  necessary  to  complete  the  transactions
contemplated  hereby.  This  Agreement  has been duly and validly  executed  and
delivered by Oneida  Financial and Oneida Savings and, subject to receipt of the
required approvals of Regulatory  Authorities  described in Section 4.03 hereof,
constitutes  the valid and binding  obligation  of Oneida  Financial  and Oneida
Savings,  enforceable  against  them in  accordance  with its terms,  subject to
applicable  bankruptcy,  insolvency and similar laws affecting creditors' rights
generally.

         (b) The  execution and delivery of this  Agreement by Oneida  Financial
and  Oneida  Savings,  subject  to  receipt  of  approvals  from the  Regulatory
Authorities  referred  to in Section  4.03 hereof and VBC's,  Vernon  Bank's and
Oneida Financial's and Oneida Savings' compliance with any conditions  contained
therein,   the  consummation  of  the  transactions   contemplated  hereby,  and
compliance  by  Oneida  Financial  or  Oneida  Savings  with any of the terms or
provisions  hereof,  will not (i)  conflict  with or  result  in a breach of any
provision of the charter or bylaws of Oneida  Financial or any Oneida  Financial
Subsidiary;  (ii)  violate  any  statute,  code,  ordinance,  rule,  regulation,
judgment,  order,  writ, decree or injunction  applicable to Oneida Financial or
any Oneida Financial Subsidiary or any of their respective properties or assets;
or (iii)  violate,  conflict  with,  result  in a breach of any  provisions  of,
constitute a default (or an event which,  with notice or lapse of time, or both,
would constitute a default), under, result in the termination of, accelerate the
performance  required by, or result in a right of termination or acceleration or
the creation of any lien,  security  interest,  charge or other encumbrance upon
any of the  properties  or assets of Oneida  Financial  or any Oneida  Financial
Subsidiary,  or under any of the terms,  conditions  or  provisions of any note,
bond, mortgage,  indenture,  deed of trust, license,  lease,  agreement or other
investment  or  obligation  to which Oneida  Financial  or any Oneida  Financial
Subsidiary is a party, or by which they or any of their respective properties or
assets may be bound or affected, except for such violations, conflicts, breaches
or defaults in clause (ii) or (iii) hereof which, either, individually or in the
aggregate will not have a Material  Adverse Effect on Oneida Financial or Oneida
Savings.

                                       29
<PAGE>

         (c) Oneida Merger Corp.  will, at the Merger  Effective Date, have full
corporate  power and  authority  to enter into and join in this  Agreement or to
execute and deliver a plan of merger to effectuate  the Merger  contemplated  by
this Agreement and,  subject to receipt of the required  approvals of Regulatory
Authorities, to consummate the transactions contemplated hereby.

         Section 4.03      Consents

         Except for consents,  approvals, filings and registrations from or with
the  Department,  FDIC,  OCC, FRB and OTS, and  compliance  with any  conditions
contained  therein,  and the approval of this Agreement by the  stockholders  of
VBC, and the filing of the articles of  combination  and  certificate  of merger
with the OTS, the Department,  and the New York Department of State, no consents
or approvals of, or filings or registrations  with, any public body or authority
are necessary,  and no consents or approvals of any third parties are necessary,
or will be, in connection  with (a) the execution and delivery of this Agreement
by  Oneida  Financial  and  Oneida  Savings,  and (b) the  completion  by Oneida
Financial and Oneida Savings of the transactions  contemplated  hereby.  Neither
Oneida  Financial nor Oneida Savings has any Knowledge or reason to believe that
(i) any required consents or approvals including  Regulatory  Approvals will not
be received or will be received with  conditions,  limitations  or  restrictions
unacceptable to it or which would adversely impact Oneida  Financial's or Oneida
Savings' ability to complete the transactions contemplated by this Agreement, or
(ii) that any public body or authority,  the consent or approval of which is not
required or any filing with which is not required, will object to the completion
of the transactions contemplated by this Agreement.

         Section 4.04      Compliance With Applicable Law

         Neither  Oneida  Financial  nor any  Oneida  Financial  Subsidiary  has
received any notification or communication from any Regulatory Authority, nor do
they have any  Knowledge of facts which would form the basis for any  Regulatory
Authority  to take action:  (i)  asserting  that Oneida  Financial or any Oneida
Financial Subsidiary is not in compliance in any material manner with any of the
statutes,  regulations or ordinances which such Regulatory  Authority  enforces;
(ii)  threatening  to revoke  any  license,  franchise,  permit or  governmental
authorization  which is material  to Oneida  Financial  or any Oneida  Financial
Subsidiary;  (iii)  requiring or threatening to require Oneida  Financial or any
Oneida Financial  Subsidiary,  or indicating that Oneida Financial or any Oneida
Financial  Subsidiary  may be required,  to enter into a cease and desist order,
agreement or memorandum of understanding  or any other agreement  restricting or
limiting,  or purporting to restrict or limit,  in any manner the  operations of
Oneida  Financial  or  any  Oneida  Financial  Subsidiary;  or  (iv)  directing,
restricting  or limiting,  or  purporting to direct,  restrict or limit,  in any
manner the operations of Oneida  Financial or any Oneida  Financial  Subsidiary,
including  without  limitation any  restriction on the payment of dividends (any
such notice,  communication,  memorandum,  agreement or order  described in this
sentence is hereinafter referred to as a "Regulatory Agreement"). Neither Oneida
Financial nor any Oneida  Financial  Subsidiary is a party to, nor has consented
to any Regulatory  Agreement.  The most recent regulatory rating given to Oneida
Savings as to compliance with the CRA is satisfactory or better.

                                       30
<PAGE>

         Section 4.05      Information to be Supplied

         The information to be supplied by Oneida Financial for inclusion in the
Proxy Statement will not, at the time the Proxy Statement is mailed, contain any
untrue statement of a material fact or omit to state any material fact necessary
in  order  to make  the  statements  therein  not  misleading.  The  information
supplied,  or  to  be  supplied,  by  Oneida  Financial  for  inclusion  in  the
Applications  will,  at the time such  documents  are filed with any  Regulatory
Authority, be accurate in all material aspects.

         Section 4.06      Financing

         As of the date hereof Oneida Financial has adequate financial resources
under regulatory  capital  standards,  and at the Merger Effective Date,  Oneida
Financial will have  sufficient  cash funds to meet its  obligations  under this
Agreement and to consummate  in a timely  manner the  transactions  contemplated
hereby and  thereby,  including  without  limitation  the  payment of the Merger
Consideration.

         Section 4.07      Legal Proceedings

         As of the date of this  Agreement,  neither  Oneida  Financial  nor any
Oneida  Financial  Subsidiary is a party to any action,  suit or proceeding that
challenges the validity or propriety of any of the transactions  contemplated by
this Agreement,  or which could adversely affect the ability of Oneida Financial
to perform under this Agreement.

                       ARTICLE V-COVENANTS OF THE PARTIES

         Section 5.01      Conduct of VBC's Business

         (a) From the date of this  Agreement to the Closing Date,  VBC and each
VBC Subsidiary will conduct its business and engage in  transactions,  including
extensions  of credit,  only in the  ordinary  course and  consistent  with past
practice and  policies,  except as otherwise  required or  contemplated  by this
Agreement,  or required by law or with the written consent of Oneida  Financial.
VBC and each VBC Subsidiary will use their reasonable good faith efforts subject
to  the  requirements  of  this  Agreement,   to  (i)  preserve  their  business
organizations intact, (ii) maintain good relationships with employees, and (iii)
preserve for  themselves  the good will of their  customers and others with whom
business relationships exist.

         (b) From the date of this  Agreement  to the  Closing  Date,  except as
otherwise  consented to by Oneida Financial in writing,  which consent shall not
be unreasonably withheld, or as contemplated or required by this Agreement,  VBC
will not, and VBC will not permit any VBC Subsidiary to:

                  (i)  amend or  change  any  provision  of its  certificate  of
incorporation,  charter,  or bylaws,  impose,  or suffer the imposition,  on any
share  of  VBC  common  stock  held  by  VBC of any  material  lien,  charge  or
encumbrance or permit any such lien to exist;

                                       31
<PAGE>

                  (ii)  change  the number of shares of its  authorized  capital
stock  or  issue  or  grant  any  Right,  option,   warrant,  call,  commitment,
subscription,  right to purchase or agreement of any  character  relating to its
authorized or issued capital stock, or any securities convertible into shares of
such capital  stock,  or split,  combine or reclassify any shares of its capital
stock,  redeem or otherwise acquire any shares of such capital stock, or sell or
issue any shares of capital stock;

                  (iii)  declare,  set  aside  or  pay  any  dividend  or  other
distribution  (whether in cash, stock or property or any combination thereof) in
respect of its capital stock;

                  (iv)  hire any new  employees  (except  to  replace  departing
employees at comparable  compensation levels),  grant or agree to pay any bonus,
severance  or  termination  to, or enter  into,  renew or amend  any  employment
agreement,  severance agreement and/or supplemental executive agreement with, or
increase  in any  manner  the  compensation  or fringe  benefits  of, any of its
directors,  officers or  employees,  except and as may be  required  pursuant to
legally  binding  commitments  existing  on the date hereof and set forth on VBC
DISCLOSURE SCHEDULES 3.08 and 3.12;

                  (v) enter into or,  except as may be required  by law,  modify
any pension,  retirement, stock purchase, stock appreciation right, stock grant,
savings,  profit  sharing,   deferred  compensation,   supplemental  retirement,
consulting,  bonus,  group  insurance or other  employee  benefit,  incentive or
welfare contract,  plan or arrangement,  or any trust agreement related thereto,
in  respect  of any  of its  directors,  officers  or  employees;  or  make  any
contributions  to any defined  contribution  or defined  benefit plan not in the
ordinary course of business consistent with past practice;

                  (vi) merge or consolidate  VBC or any VBC Subsidiary  with any
other corporation; sell or lease all or any substantial portion of the assets or
business  of VBC or any  VBC  Subsidiary;  make  any  acquisition  of all or any
substantial  portion  of the  business  or  assets of any  other  person,  firm,
association,  corporation or business organization other than in connection with
foreclosures,  settlements  in  lieu  of  foreclosure,  troubled  loan  or  debt
restructuring,  or the collection of any loan or credit arrangement between VBC,
or any  VBC  Subsidiary,  and  any  other  person;  enter  into a  purchase  and
assumption  transaction  with  respect to deposits and  liabilities;  permit the
revocation  or  surrender by VBC or any VBC  Subsidiary  of its  certificate  of
authority  to  maintain,  or file an  application  for the  relocation  of,  any
existing branch office, or file an application for a certificate of authority to
establish a new branch office;

                  (vii) sell or otherwise dispose of the capital stock of VBC or
any VBC  Subsidiary  or sell or otherwise  dispose of any asset of VBC or of any
VBC Subsidiary  other than in the ordinary  course of business  consistent  with
past  practice;  subject  any asset of VBC or of any VBC  Subsidiary  to a lien,
pledge,  security interest or other  encumbrance  (other than in connection with
deposits,   the  collections  and/or  processing  of  checks,   drafts,   notes,
instruments  or  letters  of  credit,  liens  granted to the FHLB of New York to
secure advances to VBC from the FHLB of New York, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business and  transactions in "federal  funds" and the  satisfaction of legal
requirements  in the exercise of trust powers) other than in the ordinary course
of business  consistent with past practice;  incur any indebtedness for borrowed
money (or

                                       32
<PAGE>

guarantee any indebtedness for borrowed money), except in the ordinary course of
business consistent with past practice;

                  (viii)  take  any  action  which  would  result  in any of the
representations  and  warranties  of VBC set  forth in this  Agreement  becoming
untrue as of any date  after the date  hereof  or in any of the  conditions  set
forth in Article VI hereof  not being  satisfied,  except in each case as may be
required by applicable law;

                  (ix) change any method,  practice or principle of  accounting,
except  as may be  required  from  time to time by GAAP  (without  regard to any
optional  early  adoption  date) or any  Regulatory  Authority  responsible  for
regulating VBC or Vernon Bank;

                  (x) waive,  release,  grant or transfer any material rights of
value,  cancel or compromise any material debt or claim,  or modify or change in
any material  respect any existing  material  agreement or indebtedness to which
VBC or any VBC  Subsidiary  is a party,  other  than in the  ordinary  course of
business, consistent with past practice;

                  (xi)  purchase any security for its  investment  portfolio not
rated "A" or higher by either Standard & Poor's  Corporation or Moody's Investor
Services,  Inc.,  except for a local municipal bond issue with which Vernon Bank
has a relationship,  to the extent and in amounts  consistent with Vernon Bank's
past practice,  or otherwise alter, in any material respect,  the mix, maturity,
credit or interest rate risk profile of its  portfolio of investment  securities
or its portfolio of mortgage-backed securities;

                  (xii) except for commitments  issued prior to the date of this
Agreement  which have not yet expired and which have been  disclosed  on the VBC
DISCLOSURE SCHEDULE  5.01(b)(xii),  and the renewal of existing lines of credit,
make  any new  loan or  other  credit  facility  commitment  (including  without
limitation,  lines of credit and letters of credit) to any  borrower or group of
affiliated  borrowers in excess of $30,000 in the aggregate for unsecured  loans
and $100,000 in the aggregate for secured loans; provided,  however, that Oneida
Financial's  prior  written  consent or approval to any new loan or other credit
facility commitment shall not be unreasonably withheld or delayed;

                  (xiii)  enter  into,   renew,   extend  or  modify  any  other
transaction with any Affiliate;

                  (xiv) purchase any debt securities,  or enter into any futures
contract,  option,  interest  rate caps,  interest  rate floors,  interest  rate
exchange  agreement or other  agreement or take any other action for purposes of
hedging  the  exposure  of  its  interest-earning  assets  and  interest-bearing
liabilities to changes in market rates of interest;

                  (xv) except for the  execution of this  Agreement  and actions
taken in accordance with this Agreement, take any action that would give rise to
a right of payment to any individual under any employment agreement;

                  (xvi)  make  any  change  in  policies  with  regard  to:  the
extension  of credit,  or the  establishment  of  reserves  with  respect to the
possible loss thereon or the charge off of losses

                                       33
<PAGE>

incurred thereon;  investments;  asset/liability  management;  or other material
banking policies,  including deposit liabilities, in any material respect except
as may be required by changes in applicable law or regulations or direction of a
Regulatory Authority;

                  (xvii) except for the execution of this Agreement, and actions
taken in accordance with this Agreement, take any action that would give rise to
a right of payment or an  acceleration of the right to payment to any individual
under any Compensation and Benefit Plan;

                  (xviii)  make any  capital  expenditures  in excess of $10,000
individually  or  $25,000  in the  aggregate,  other  than  pursuant  to binding
commitments  existing on the date hereof and other than expenditures not greater
than $5,000 in order to maintain existing assets in good repair;

                  (xix)  purchase or  otherwise  acquire,  or sell or  otherwise
dispose  of, any  assets or incur any  liabilities  other  than in the  ordinary
course of business consistent with past practices and policies;

                  (xx) sell any loan (other than sales of loans  secured by one-
to  four-family  real estate that are  consistent  with past  practice)  or OREO
properties  (other than sales of OREO which generate a net book loss of not more
than  $5,000  per  property)  or  acquire  any new  loan  participation  or loan
servicing rights;

                  (xxi)  modify  or  restructure  the  terms  of any loan to any
borrower or group of affiliated  borrowers in excess of $30,000 in the aggregate
for unsecured loans and $100,000 in the aggregate for secured loans;

                  (xxii) sell or otherwise dispose of any loan,  mortgage-backed
security  or  investment  security  except in the  ordinary  course of  business
consistent with past practices;

                  (xxiii)  except  as  set  forth  in  VBC  DISCLOSURE  SCHEDULE
5.01(b)(xxiii)  undertake,  enter  into or renew any  lease,  contract  or other
commitment for its account,  other than in the normal course of providing credit
to customers as part of its banking business,  involving a payment by VBC or any
VBC Subsidiary of more than $10,000 annually, or containing a material financial
commitment and extending beyond 12 months from the date hereof;

                  (xxiv)  except as required by  applicable  law,  regulation or
regulatory directive,  charge-off any loan with a principal balance in excess of
$5,000;

                  (xxv) materially change the pricing  strategies of Vernon Bank
with respect to its deposits or loan accounts;

                  (xxvi) invest in "high risk" mortgage  derivative  investments
as defined by the Federal Financial Institutions Examination Council;

                                       34
<PAGE>

                  (xxvii)  discharge or satisfy any lien or  encumbrance  or pay
any material  obligation  or liability  (absolute or  contingent)  other than at
scheduled maturity or in the ordinary course of business;

                  (xxviii)  enter  or  agree to  enter  into  any  agreement  or
arrangement  granting  any  preferential  right to purchase any of its assets or
rights or requiring  the consent of any party to the transfer and  assignment of
any such assets or rights;

                  (xxix) foreclose upon or otherwise take title to or possession
or  control  of  any  real  property   without  first   obtaining  a  phase  one
environmental  report thereon  indicating that there is no apparent violation of
or liability under the Environmental Laws, provided,  however, that it shall not
be  required  to  obtain  such a report  with  respect  to one- to  four-family,
non-agricultural residential property of five (5) acres or less to be foreclosed
upon unless it has reason to believe that such property might be in violation of
or require remediation under Environmental Laws;

                  (xxx)  except  as  set  forth  in  VBC   DISCLOSURE   SCHEDULE
5.01(b)(xxx),  make any sale,  assignment,  transfer,  pledge,  hypothecation or
other  disposition  of any assets  having a book or market  value,  whichever is
greater, in the aggregate in excess of $10,000,  other than pledges of assets to
secure government  deposits,  to exercise trust powers, sales of assets received
in satisfaction of debts previously contracted in the normal course of business,
issuance of loans, sales of previously purchased government guaranteed loans, or
transactions in the investment  securities  portfolio by VBC or a VBC Subsidiary
or repurchase agreements made, in each case, in the ordinary course of business;

                  (xxxi)  except in the ordinary  course of business  consistent
with past practice and  involving an amount not in excess of $5,000,  settle any
claim,  action or  proceeding;  provided that no settlement  shall be made if it
involves a precedent for other similar claims, which in the aggregate,  could be
material to VBC, taken as a whole;

                  (xxxii) take any action which would or is reasonably likely to
adversely effect or materially delay the receipt of the necessary approvals from
the  Regulatory  Authorities,  except as may be  required  by law or  regulatory
directive;

                  (xxxiii)  take  action that would or is  reasonably  likely to
materially  and  adversely  affect VBC's  ability to perform its  covenants  and
agreements under this Agreement,  except as may be required by law or regulatory
directive;

                  (xxxiv)  take  any  action  that  would  result  in any of the
conditions to the Merger not being  satisfied,  except as may be required by law
or regulatory directive; or

                  (xxxv) agree to do any of the foregoing.

                                       35
<PAGE>

         Section 5.02      Access; Confidentiality

         (a) Each of VBC and the VBC Subsidiaries  shall permit Oneida Financial
and its representatives  reasonable access to its properties, and shall disclose
and make available to them all books, papers and records relating to the assets,
stock ownership, properties,  operations, obligations and liabilities of VBC and
its Subsidiaries, including, but not limited to, all books of account (including
the  general  ledger),  tax  records,  minute  books of  meetings  of  boards of
directors and any committees thereof (other than minutes that discuss any of the
transactions contemplated by this Agreement),  and stockholders,  organizational
documents,   bylaws,  material  contracts  and  agreements,   filings  with  any
Regulatory  Authority,   accountants'  work  papers,   litigation  files,  plans
affecting  employees,  and any other  business  activities or prospects in which
Oneida Financial may have a reasonable interest.  Notwithstanding the foregoing,
neither VBC nor the VBC  Subsidiaries  shall be required to provide access to or
to  disclose  information  where  such  access or  disclosure  would  violate or
prejudice the rights of such party's customers,  jeopardize the  attorney-client
privilege of the  institution  in possession or control of such  information  or
contravene  any law, rule,  regulation,  order,  judgment or decree.  Subject to
applicable  legal  requirements,   the  parties  hereto  will  make  appropriate
substitute disclosure  arrangements under circumstances in which restrictions of
the preceding  sentence  apply.  VBC and the VBC  Subsidiaries  shall make their
respective  officers,   employees  and  agents  and  authorized  representatives
(including counsel and independent public accountants)  available to confer with
Oneida  Financial and its  representatives,  subject to the  limitations of this
paragraph.  Upon  advance  notice and  coordination  of mutually  agreeable  and
reasonable  arrangements,  VBC and  each  VBC  Subsidiary  shall  permit  Oneida
Financial,  at its expense,  to cause a "phase I environmental  audit" and, if a
recognized   environmental   condition  is  found  or  suspected,  a  "phase  II
environmental  audit" to be performed at any physical location owned or occupied
by VBC or any VBC Subsidiary.  For any leased locations, such arrangements shall
be subject to obtaining  any necessary  consents of the landlord.  Copies of any
such  environmental  reports  shall be  provided  to VBC upon its  request.  The
parties will hold all such  information  delivered in  confidence  to the extent
required by, and in accordance with, the provisions of the agreement between VBC
and Oneida Financial (the "Confidentiality Agreement").

         (b)  Oneida  Financial  agrees  to  conduct  such   investigations  and
discussions  hereunder  in a manner  so as not to  interfere  unreasonably  with
normal operations and customer and employee relationships of the other party.

         (c) Subject to applicable legal requirements, in addition to the access
permitted by subparagraph (a) above, from the date of this Agreement through the
Closing Date, VBC shall permit employees of Oneida Financial  reasonable  access
to information relating to problem loans, loan restructurings and loan work-outs
of VBC and the VBC Subsidiaries.

         (d) If the  transactions  contemplated  by this Agreement  shall not be
consummated,  VBC and Oneida Financial will each destroy or return all documents
and records  obtained  from the other party or its  representatives,  during the
course of its  investigation  and will cause all information with respect to the
other party obtained  pursuant to this Agreement or preliminarily  thereto to be
kept confidential,  except to the extent such information becomes public through
no  fault  of the  party  to whom the  information  was  provided  or any of its
representatives  or agents

                                       36
<PAGE>

and except to the extent disclosure of any such information is legally required.
VBC and Oneida  Financial  shall each give  prompt  written  notice to the other
party  of any  contemplated  disclosure  where  such  disclosure  is so  legally
required.

         Section 5.03      Regulatory Matters and Consents

         (a) Oneida  Financial and Oneida Savings will prepare all  Applications
and make all filings  for,  and use their best  efforts to obtain as promptly as
practicable after the date hereof, all necessary permits,  consents,  approvals,
waivers and authorizations of all Regulatory  Authorities necessary or advisable
to consummate the transactions contemplated by this Agreement.

         (b) VBC will furnish Oneida  Financial with all information  concerning
VBC and VBC Subsidiaries as may be necessary or advisable in connection with any
Application or filing made by or on behalf of Oneida Financial to any Regulatory
Authority in connection  with the  transactions  contemplated by this Agreement.
The information supplied, or to be supplied by VBC and Vernon Bank for inclusion
in the  Applications  will,  at the  time  such  documents  are  filed  with any
Regulatory Authority, be accurate in all material respects.

         (c) Oneida  Financial  and VBC will  promptly  furnish  each other with
copies of all material written  communications  to, or received by them from any
Regulatory  Authority  in respect of the  transactions  contemplated  hereby and
notice of material oral  communications  with the  Regulatory  Authorities  with
respect to the transactions contemplated hereby.

         (d) The parties  hereto  agree that they will  consult  with each other
with  respect  to  the  obtaining  of  all  permits,  consents,   approvals  and
authorizations of all third parties and Regulatory Authorities. Oneida Financial
will  furnish VBC with (i) copies of all  Applications  prior to filing with any
Regulatory Authority and provide VBC a reasonable opportunity to provide changes
to such  Applications,  and (ii)  copies  of all  Applications  filed by  Oneida
Financial.

         (e) VBC and  Oneida  Financial  will  cooperate  with each other in the
foregoing  matters and will furnish the  responsible  party with all information
concerning  it and  its  Subsidiaries  as  may  be  necessary  or  advisable  in
connection with any Application or filing  (including the Proxy  Statement) made
by or on  behalf of  Oneida  Financial  or VBC to any  Regulatory  Authority  in
connection  with  the  transactions  contemplated  by this  Agreement,  and such
information  will  be  accurate  and  complete  in  all  material  respects.  In
connection  therewith,  each party will provide certificates and other documents
reasonably requested by the other.

         Section 5.04      Taking of Necessary Action

         (a) Oneida  Financial  and VBC shall each use its best  efforts in good
faith,  and each of them shall cause its  Subsidiaries to use their best efforts
in good  faith,  to (i)  obtain  any  necessary  stockholder  approval  of their
respective stockholders to complete the Merger, (ii) furnish such information as
may be required in connection with the preparation of the documents  referred to
in  Section  5.03 of this  Agreement,  and  (iii)  take or cause to be taken all
action  necessary on its part using its best efforts so as to permit  completion
of the Merger  including,

                                       37
<PAGE>

without  limitation,  (A) obtaining the consent or approval of each  individual,
partnership,  corporation,  association or other business or professional entity
whose  consent or approval  is required  for  consummation  of the  transactions
contemplated  hereby  (including  assignment  of leases  without  any  change in
terms), provided that neither VBC nor any VBC Subsidiary shall agree to make any
payments or  modifications  to agreements in  connection  therewith  without the
prior written  consent of Oneida  Financial,  and (B) requesting the delivery of
appropriate  opinions,  consents  and letters  from its counsel and  independent
auditors.  No party hereto shall take,  or cause,  or to the best of its ability
permit to be taken, any action that would impair the prospects of completing the
Merger and the transactions  contemplated  hereby pursuant to this Agreement and
the related  agreements;  provided that nothing herein  contained shall preclude
Oneida Financial or VBC from exercising its rights under this Agreement.

         (b) VBC shall  prepare,  subject to the  review  and  consent of Oneida
Financial  with  respect  to  matters  relating  to  Oneida  Financial  and  the
transactions  contemplated by this Agreement,  a Proxy Statement to be mailed to
the  stockholders of VBC in connection with the meeting of its  stockholders and
transactions  contemplated  hereby,  which Proxy  Statement shall conform to all
applicable legal requirements.  The parties shall cooperate with each other with
respect to the  preparation of the Proxy  Statement.  VBC shall,  as promptly as
practicable following the preparation thereof, file the Proxy Statement with the
applicable  agency, if any, and VBC shall use all reasonable efforts to have the
Proxy Statement  mailed to  stockholders  as promptly as  practicable.  VBC will
promptly  advise Oneida  Financial of the time when the Proxy Statement has been
filed, if applicable,  and mailed, or of any comments from any applicable agency
or any request for additional information.

         Section 5.05      Certain Agreements

         (a)  From and  after  the  Merger  Effective  Date  through  the  sixth
anniversary  thereof,  or until the final  disposition  of such Claim (as herein
defined)  with respect to any Claim  asserted  within the period,  and except as
limited,  conditioned  or prohibited by laws,  rules,  regulations  or orders to
which  Oneida  Financial  is subject at the time such  payments  are to be made,
Oneida  Financial  shall, to the fullest extent  permitted under applicable law,
and under the  respective  Certificate  of  Incorporation,  bylaws,  or  similar
governing  documents  of VBC or any VBC  subsidiary  as in effect on the date of
this Agreement,  indemnify,  defend and hold harmless each present  director and
officer of VBC and any VBC  Subsidiary  determined  as of the Closing  Date (the
"Indemnified  Parties") against all losses,  claims,  damages,  costs,  expenses
(including reasonable attorneys' fees and expenses),  liabilities,  judgments or
amounts  paid in  settlement  (with  the  approval  of Oneida  Financial,  which
approval shall not be  unreasonably  withheld) or in connection  with any claim,
action,  suit,  proceeding or  investigation  arising out of matters existing or
occurring at or prior to the Merger  Effective  Date (a "Claim"),  except that a
Claim shall not include any action, suit,  proceeding or investigation,  whether
formal or informal, by a Regulatory Authority, in which an Indemnified Party is,
or is  threatened to be made, a party or a witness based in whole or in part on,
or arising  in whole or in part out of, the fact that such  person is a director
or officer of VBC or any VBC  Subsidiary,  regardless  of whether  such Claim is
asserted  or claimed  prior to, at or after the  Closing  Date,  to the  fullest
extent to which directors and officers of VBC or any VBC Subsidiary are entitled
under applicable law as in effect on the date hereof (and Oneida Financial shall
pay  expenses  in  advance  of the  final  disposition  of any

                                       38
<PAGE>

such action or proceeding to each  Indemnified  Party to the extent  permissible
under applicable law as in effect on the date hereof;  provided, that the person
to whom expenses are advanced  provides an undertaking to repay such expenses if
it  is   ultimately   determined   that   such   person  is  not   entitled   to
indemnification).  All rights to  indemnification in respect of a Claim asserted
or made within the period  described in the preceding  sentence  shall  continue
until the final non-appealable disposition of such Claim.

         (b) Any  Indemnified  Party  wishing  to  claim  indemnification  under
Section  5.05(a),  upon  learning of any Claim,  shall  promptly  notify  Oneida
Financial,  but the failure to so notify shall not relieve  Oneida  Financial of
any  liability it may have to such  Indemnified  Party except to the extent that
such failure materially prejudices Oneida Financial.  In the event of any Claim,
(i) Oneida  Financial  shall have the right to assume the defense  thereof (with
counsel  reasonably  satisfactory  to  the  Indemnified  Party)  and  upon  such
assumption  shall  not be  liable  to such  Indemnified  Parties  for any  legal
expenses of other counsel or any other  expenses  subsequently  incurred by such
Indemnified  Parties in  connection  with the defense  thereof,  except that, if
Oneida  Financial  elects  not  to  assume  such  defense  or  counsel  for  the
Indemnified  Parties  advises  that there are issues  which raise  conflicts  of
interest between Oneida Financial and the Indemnified  Parties,  the Indemnified
Parties may retain counsel satisfactory to them and Oneida Financial, and Oneida
Financial  shall pay all  reasonable  fees and  expenses of such counsel for the
Indemnified  Parties  promptly as  statements  therefor are  received,  provided
further that Oneida  Financial shall in all cases be obligated  pursuant to this
paragraph  to pay for only one firm of counsel  for all  Indemnified  Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same allegations or circumstances, (ii) the
Indemnified  Parties  will  cooperate in the defense of any such Claim and (iii)
Oneida  Financial  shall not be liable for any settlement  effected  without its
prior written consent.

         (c) In the event Oneida  Financial or any of its  successors or assigns
(i) consolidates  with or merges into any other Person and shall not continue or
survive  such  consolidation  or merger,  or (ii)  transfers  or conveys  all or
substantially all of its properties and assets to any Person,  then, and in each
such case, to the extent  necessary,  proper provision shall be made so that the
successors and assigns of Oneida  Financial  assume the obligations set forth in
this Section 5.05.

         (d) Oneida  Financial will use its reasonable best efforts to maintain,
or cause  Oneida  Savings to  maintain,  in effect for six years  following  the
Merger Effective Date, the current directors' and officers'  liability insurance
policies maintained by VBC and Vernon Bank (provided, that Oneida Financial may,
at its  option,  substitute  therefor  polices  of at least  the  same  coverage
containing  terms and conditions  which are not materially  less favorable) with
respect  to matters  occurring  prior to the Merger  Effective  Date;  provided,
however,  that in no event shall Oneida Financial be required to expend pursuant
to this Section  5.05(d) in the aggregate more than $20,000 with respect to such
insurance (the "Maximum Amount");  provided,  further, that if the amount of the
annual premiums  necessary to maintain or procure such insurance coverage exceed
the Maximum  Amount,  Oneida  Financial  shall  maintain  the most  advantageous
policies of directors' and officers' insurance  obtainable for an annual premium
equal to the Maximum Amount.  In connection  with the foregoing,  VBC and Vernon
Bank agrees in order for Oneida

                                       39
<PAGE>

Financial to fulfill its agreement to provide directors' and officers' liability
insurance  policies for six years to provide such insurer or substitute  insurer
with such  representations  as such  insurer  may  request  with  respect to the
reporting of any prior claims.

         (e) The  provisions  of this  Section  5.05 are  intended to be for the
benefit of, and shall be enforceable by, each  Indemnified  Party and his or her
heirs and representatives.

         Section 5.06      No Other Bids and Related Matters

         From and after the date hereof  until the earlier of the Closing or the
termination of this Agreement,  neither VBC, nor any VBC Subsidiary,  nor any of
their respective  officers,  directors,  employees,  representatives,  agents or
affiliates (including,  without limitation,  any investment banker,  attorney or
accountant retained by VBC or any VBC Subsidiary), will, directly or indirectly,
initiate,  solicit  or  knowingly  encourage  (including  by way  of  furnishing
non-public information or assistance), or facilitate knowingly, any inquiries or
the making of any proposal that  constitutes,  or may  reasonably be expected to
lead to, any Acquisition  Proposal (as defined below), or enter into or maintain
or continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an  Acquisition  Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its officers,  directors, or
employees or any VBC Subsidiary or any  investment  banker,  financial  advisor,
attorney,  accountant or other representative  retained by any VBC Subsidiary to
take any such action,  and VBC shall notify Oneida  Financial orally (within one
business day) and in writing (as promptly as practicable) of all of the relevant
details  relating to all inquiries and proposals  which it or any VBC Subsidiary
or any such officer, director,  employee,  investment banker, financial advisor,
attorney, accountant or other representative may receive relating to any of such
matters;  provided,  however,  that nothing contained in this Section 5.06 shall
prohibit the Board of Directors of VBC from (i)  furnishing  information  to, or
entering into  discussions or negotiations  with any person or entity that makes
an unsolicited written,  bona fide proposal to acquire VBC pursuant to a merger,
consolidation, share exchange, business combination, tender or exchange offer or
other  similar  transaction,  if, and only to the extent that:  (A) the Board of
Directors of VBC  determines  in its good faith,  after  reasonable  inquiry and
consultation  with its independent  financial  advisor that such proposal may be
superior to the Merger from a financial point-of-view to VBC's stockholders; (B)
the Board of Directors of VBC, after consultation with and after considering the
advice of independent  legal  counsel,  determines in good faith that failure to
take such action may cause the Board of Directors of VBC to breach its fiduciary
duties to  stockholders  under  applicable law (such proposal that satisfies (A)
and (B)  being  referred  to  herein  as a  "Superior  Proposal");  (C) prior to
furnishing  such  information  to, or entering into  discussions or negotiations
with,  such  person  or  entity,  VBC  (x)  notifies  Oneida  Financial  of such
inquiries, proposals or offers received by, any such information requested from,
or any such discussions or negotiations sought to be initiated or continued with
VBC or any of its  representatives,  indicating in connection  with such notice,
the name of such person and the material  terms and conditions of any inquiries,
proposals  or offers,  and (y)  receives  from such person or entity an executed
confidentiality   agreement   substantially  identical  to  the  Confidentiality
Agreement;  and (D) the VBC special meeting of stockholders  convened to approve
this  Agreement has not occurred,  (ii)  complying  with Rule 14e-2  promulgated
under the Exchange Act with regard to a tender or exchange offer, or (iii) prior
to the VBC special meeting of  stockholders  convened to approve

                                       40
<PAGE>

this Agreement,  failing to make or withdrawing or modifying its  recommendation
for  stockholders  to approve  this  Agreement  because  there exists a Superior
Proposal and the Board of Directors of VBC,  after  consultation  with and after
considering  the advice of independent  legal counsel,  determined in good faith
that failure to take such action may cause such Board of Directors to breach its
fiduciary  duties to  stockholders  under  applicable law.  Notwithstanding  the
foregoing,  this Agreement  shall be submitted to the VBC  stockholders  for the
purpose of adopting this Agreement and approving the Merger,  provided that this
Agreement  shall not be required to be submitted to the  stockholders  of VBC if
this Agreement has been terminated  pursuant to Section  7.01(c)(iv) or (d)(iv).
VBC agrees that it will  promptly keep Oneida  Financial  informed of the status
and terms of any  Acquisition  Proposals  and the  discussions  or  negotiations
relating thereto. For purposes of this Agreement,  "Acquisition  Proposal" shall
mean  any  proposal  or  offer  as to any  of  the  following  (other  than  the
transactions  contemplated  hereunder) involving VBC or any VBC Subsidiary:  (i)
any  merger,  consolidation,  share  exchange,  business  combination,  or other
similar transactions; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 10% or more of the assets of VBC, taken as a whole, in a
single transaction or series of transactions; (iii) any tender offer or exchange
offer for 10% or more of the  outstanding  shares of capital stock of VBC or the
filing of a  registration  statement  under  the  Securities  Act in  connection
therewith;  or (iv) any public announcement of a proposal,  plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.

         Section 5.07      Duty to Advise; Duty to Update the VBC Disclosure
Schedules

         VBC shall  promptly  advise  Oneida  Financial  of any  change or event
having a  Material  Adverse  Effect on it or on any VBC  Subsidiary  or which it
believes  would or would be reasonably  likely to cause or constitute a material
breach of any of its representations,  warranties or covenants set forth herein.
VBC shall update the VBC DISCLOSURE  SCHEDULES as promptly as practicable  after
the  occurrence  of an event or fact which,  if such event or fact had  occurred
prior  to the date of this  Agreement,  would  have  been  disclosed  in the VBC
DISCLOSURE  SCHEDULES.  The delivery of such updated  Schedule shall not relieve
VBC from any breach or violation of this Agreement and shall not have any effect
for the purposes of determining  the  satisfaction of the condition set forth in
Sections 6.02(c) hereof.

         Section 5.08      Conduct of Oneida Financial's Business

         From the date of this Agreement to the Closing Date,  Oneida  Financial
will use its best efforts to (x) preserve its business organizations intact, (y)
maintain  good  relationships  with  employees,  and (z) preserve for itself the
goodwill of customers  of Oneida  Savings and its other  Subsidiaries.  From the
date of this  Agreement to the Closing Date,  neither  Oneida  Financial nor any
Oneida  Financial  Subsidiary will (i) amend its  certificate of  incorporation,
charter  or  bylaws  in any  manner  inconsistent  with the  prompt  and  timely
consummation of the transactions  contemplated by this Agreement,  (ii) take any
action which would result in any of the representations and warranties of Oneida
Financial or Oneida  Savings set forth in this Agreement  becoming  untrue as of
any date after the date hereof or in any of the  conditions set forth in Article
VI  hereof  not being  satisfied,  except  in each  case as may be  required  by
applicable  law,  (iii) take any action which would or is  reasonably  likely to
adversely effect or materially delay

                                       41
<PAGE>

the receipt of the necessary  approvals  from the Regulatory  Authorities,  (iv)
take action  that would or is  reasonably  likely to  materially  and  adversely
affect Oneida Financial's  ability to perform its covenants and agreements under
this  Agreement,  (v) take any action that would result in any of the conditions
to the Merger not being satisfied, or (vi) agree to do any of the foregoing.

         Section 5.09      Board and Committee Minutes

         VBC and the VBC  Subsidiaries  shall each  provide to Oneida  Financial
within  thirty  (30)  days  after  any  meeting  of  their  respective  Board of
Directors,  or any  committee  thereof,  a copy of the minutes of such  meeting,
except  that with  respect to any meeting  held  within  thirty (30) days of the
Closing Date,  such minutes shall be provided to each party prior to the Closing
Date  (provided  that they may redact any portion of the minutes  that relate to
any  confidential  discussion  or  matters  related  to this  Agreement  and the
transactions contemplated thereby).

         Section 5.10      Undertakings by VBC and Oneida Financial

         (a) From and after the date of this Agreement:

                  (i) Voting by Directors.  Simultaneously with the execution of
this Agreement,  each Director of VBC shall enter into the VBC Voting  Agreement
set forth as Exhibit A to this Agreement;

                  (ii) Proxy Solicitor. VBC may, and shall if requested to do so
by  Oneida   Financial,   retain  a  proxy  solicitor  in  connection  with  the
solicitation of stockholder approval of this Agreement;

                  (iii) Outside Service Bureau Contracts.  If requested to do so
by Oneida  Financial,  VBC shall use its best efforts to obtain an extension of,
or termination  of, any contract with an outside  service bureau or other vendor
of services  to VBC,  on terms and  conditions  mutually  acceptable  to VBC and
Oneida Financial;

                  (iv)  Board  Meetings.  VBC and  Vernon  Bank  shall  permit a
representative of Oneida Financial to attend any meeting of VBC or Vernon Bank's
Board of Directors or the Committees  thereof as an observer (provided that they
shall not be required to permit the Oneida  Financial  representative  to remain
present during any confidential discussion of the Agreement and the transactions
contemplated thereby) or during the discussion of any other matter for which the
Board of Directors  reasonably  determines  that the presence of an observer may
violate a confidentiality obligation or other legal or regulatory requirement;

                  (v) List of Nonperforming  Assets and Lending Activities.  VBC
shall provide Oneida Financial, within ten (10) days of the end of each calendar
month, a written list of nonperforming assets (the term "nonperforming  assets,"
for  purposes  of this  subsection,  means (i)  loans  that are  "troubled  debt
restructuring" as defined in Statement of Financial  Accounting Standards No.15,
"Accounting  by Debtors and  Creditors for Troubled  Debt  Restructuring,"  (ii)
loans on nonaccrual, (iii) real estate owned, (iv) all loans ninety (90) days or
more past due) as of

                                       42
<PAGE>

the end of such month and (iv) and impaired loans. On a monthly basis, VBC shall
provide Oneida  Financial with a schedule of all loan approvals,  which schedule
shall indicate the loan amount, loan type and information  contained in standard
monthly reports,  the form of which has been provided to Oneida  Financial.  VBC
shall not foreclose on any commercial real estate loan except to the extent that
VBC and Oneida  Financial  mutually agree on the  conditions of the  foreclosure
proceedings or for proceedings currently in process;

                  (vi)  Reserves  and  Merger-Related  Costs.  On or before  the
Merger Effective Date, VBC shall establish such additional accruals and reserves
as may be  necessary to conform the  accounting  reserve  practices  and methods
(including  credit  loss  practices  and  methods)  of VBC to  those  of  Oneida
Financial (as such practices and methods are to be applied to VBC from and after
the Closing  Date) and Oneida  Financial's  plans with respect to the conduct of
the business of VBC following the Merger and otherwise to reflect Merger-related
expenses and costs  incurred by VBC;  provided,  however,  that VBC shall not be
required to take such action unless Oneida  Financial agrees in writing that all
conditions  to closing set forth in Section  6.02 have been  satisfied or waived
(except for the  expiration of any  applicable  waiting  periods);  prior to the
delivery by Oneida Financial of the writing referred to in the preceding clause,
VBC shall provide Oneida Financial a written  statement,  certified by the chief
executive  officer  of VBC  and  dated  the  date  of  such  writing,  that  the
representation  made  in  Section  3.15  hereof  is true  as of  such  date  or,
alternatively,  setting  forth in detail the  circumstances  that  prevent  such
representation  from being true as of such date;  and no accrual or reserve made
by VBC or any VBC Subsidiary  pursuant to this subsection,  or any litigation or
regulatory  proceeding  arising  out of  any  such  accrual  or  reserve,  shall
constitute  or be  deemed  to be a breach or  violation  of any  representation,
warranty,  covenant,  condition  or  other  provision  of this  Agreement  or to
constitute a termination  event within the meaning of Section 7.01(b) hereof. No
action shall be required to be taken by VBC  pursuant to this  Section  5.10(vi)
if, in the opinion of VBC's independent  auditors,  such action would contravene
GAAP;

                  (vii) Stockholders Meeting. VBC shall submit this Agreement to
its  stockholders  for approval at a meeting to be held within ninety 90 days of
the date of this  Agreement,  and,  subject to the next sentence,  its Boards of
Director shall recommend approval of this Agreement to the VBC stockholders. The
Board of Directors of VBC may fail to make such a  recommendation,  or withdraw,
modify or change  any such  recommendation  only in  connection  with a Superior
Proposal, as set forth in Section 5.06 of this Agreement, and only if such Board
of Directors,  after having  consulted with and considered the advice of outside
counsel to such Board, has determined that the making of such recommendation, or
the  failure  so  to  withdraw,  modify  or  change  its  recommendation,  would
constitute a breach of the  fiduciary  duties of such  directors  under New York
law; and

                  (viii) Systems  Conversions.  VBC and Oneida  Financial  shall
meet on a regular  basis to discuss and plan for the  conversion  of VBC and the
VBC Subsidiaries' data processing and related electronic  informational  systems
to those used by Oneida  Financial and its  subsidiaries,  which  planning shall
include,  but not be limited to,  discussion of the possible  termination by VBC
and Vernon Bank of third-party  service provider  arrangements  effective at the
Effective Time or at a date thereafter,  non-renewal of personal property leases
and software  licenses used by VBC or any of its Subsidiaries in connection with
its  systems  operations,

                                       43
<PAGE>

retention of outside  consultants  and  additional  employees to assist with the
conversion,  and  outsourcing,  as appropriate,  of proprietary or self-provided
system services, it being understood that VBC shall not be obligated to take any
such action prior to the Effective  Time and,  unless VBC otherwise  agrees,  no
conversion  shall take place prior to the Effective  Time. In the event that VBC
or any of its Subsidiaries takes, at the request of Oneida Financial, any action
relative to third  parties to  facilitate  the  conversion  that  results in the
imposition of any termination fees, expenses or charges,  Oneida Financial shall
indemnify VBC and its Subsidiaries for any such fees, expenses and charges,  and
the costs of reversing the conversion  process,  if for any reason the Merger is
not consummated because of a breach of this Agreement by Oneida Financial.

         (b) From and after the date of this Agreement, Oneida Financial and VBC
shall each:

                  (i) Filings  and  Approvals.  Cooperate  with the other in the
preparation and filing, as soon as practicable, of (A) the Applications, (B) the
Proxy Statement, (C) all other documents necessary to obtain any other approvals
and consents required to effect the completion of the Merger,  and (D) all other
documents contemplated by this Agreement;

                  (ii)   Public   Announcements.   Cooperate   and  cause  their
respective officers, directors, employees and agents to cooperate in good faith,
consistent  with their  respective  legal  obligations,  in the  preparation and
distribution  of, and agree upon the form and  substance  of, any press  release
related to this  Agreement and the  transactions  contemplated  hereby,  and any
other  public   disclosures   related  thereto,   including  without  limitation
communications to stockholders, internal announcements and customer disclosures,
but  nothing  contained  herein  shall  prohibit  either  party from  making any
disclosure which its counsel deems necessary, provided that the disclosing party
notifies  the other party  reasonably  in advance of the timing and  contents of
such disclosure;

                  (iii)  Maintenance  of  Insurance.  Maintain,  and cause their
respective Subsidiaries to maintain, insurance in such amounts as are reasonable
to cover such risks as are  customary in relation to the  character and location
of its properties and the nature of its business;

                  (iv)  Maintenance  of Books and Records.  Maintain,  and cause
their  respective  Subsidiaries  to  maintain,  books of account  and records in
accordance  with generally  accepted  accounting  principles  applied on a basis
consistent  with those  principles  used in preparing the  financial  statements
heretofore delivered;

                  (v) Taxes.  File all  federal,  state,  and local tax  returns
required to be filed by them or their  respective  Subsidiaries on or before the
date such returns are due (including any  extensions) and pay all taxes shown to
be due on such returns on or before the date such  payment is due,  except those
being contested in good faith; or

                  (vi) Delivery of Securities.  Deliver to the other,  copies of
all Securities  Documents and Regulatory Reports  simultaneously with the filing
thereof.

         (c) VBC DISCLOSURE SCHEDULE 5.10(c) sets forth a good faith estimate of
VBC's  budget of  Merger-related  expenses  (the  "Budget")  to be incurred  and
payable  by  VBC  in

                                       44
<PAGE>

connection  with  this  Agreement  and  the  transactions  contemplated  hereby,
including the fee and expenses of counsel,  accountants,  investment bankers and
other  professionals.  VBC shall promptly notify Oneida  Financial if or when it
determines  that it  expects to exceed its  Budget.  Promptly,  but in any event
within 30 days, after the execution of this Agreement,  VBC shall ask all of its
attorneys and other professionals to render current and correct invoices for all
unbilled time and disbursements. VBC shall accrue and/or pay all of such amounts
as soon as possible.  VBC shall request that its  professionals  render  monthly
invoices  within 30 days after the end of each month.  VBC shall  notify  Oneida
Financial  monthly of all  out-of-pocket  expenses,  which VBC has  incurred  in
connection with this  Agreement.  No later than three (3) business days prior to
the Closing Date,  VBC shall provide  Oneida  Financial  with a statement of all
Merger-related  expenses  incurred and payable,  and to be incurred and payable,
including the fees and expenses of counsel, accountants,  investment bankers and
other  professionals,  and all  costs  and  expenses  associated  with any legal
proceedings  relating  to  this  Agreement  and  the  transactions  contemplated
hereunder, through the Merger Effective Date (the "Closing Expense Statement").

         Section 5.11      Employee and Termination Benefits; Directors and
Management

         (a) Employee  Benefits.  Except as otherwise  specifically  provided in
             ------------------
this Section 5.11, Oneida Financial will review all VBC Compensation and Benefit
Plans to determine whether to terminate or continue such plans.

                  (1) Health, Welfare and Fringe Benefits. All VBC employees who
                      -----------------------------------
become  employed by Oneida  Financial or any entity  within the same  controlled
group of  corporations  as  Oneida  Financial  as a result of the  Merger  ("VBC
Continuing  Employees") shall become participants in all health,  welfare and/or
fringe benefit plans,  programs and policies on the same terms and conditions as
are applicable to employees of Oneida Financial(or  Subsidiary,  as applicable).
In addition, VBC Continuing Employees shall be given credit for service with VBC
(or a VBC subsidiary or any predecessor  thereto) prior to the Merger  Effective
Date for purposes of (i)  determining  eligibility;  (ii) satisfying any waiting
periods concerning pre-existing conditions;  and (iii) satisfying any co-payment
or  deductible  requirements.  Furthermore,  VBC employees  whose  employment is
terminated  in  connection  with the  Merger  shall be  eligible  for  severance
benefits  pursuant to the  Transition  Benefit Plan  adopted by Oneida  Savings,
subject  to the  qualifications  and  limitations  thereof,  and the  Transition
Benefit Plan shall remain in effect for one year from the Merger Effective Date.

                  (2) Tax-Qualified Retirement Plans.
                      ------------------------------

                           (A) VBC ESOP. The Vernon Bank Corporation Amended and
                               --------
Restated  Employee  Stock  Ownership  Plan ("VBC ESOP") shall be terminated  and
participants shall become fully vested in their account balances as of, or prior
to,  the  Merger  Effective  Date.  All  shares  held by the VBC  ESOP  shall be
converted into the right to receive the Merger  Consideration,  all  outstanding
VBC ESOP  indebtedness  shall be repaid  as soon as  practicable  following  the
Merger  Effective  Date,  and the  balance of the  shares  and any other  assets
remaining in the loan suspense account shall be allocated and distributed to VBC
ESOP participants  (subject to the receipt of a favorable  determination  letter
from the IRS), as provided for in the VBC ESOP and unless otherwise  required by
applicable  law.  Prior to the Merger  Effective  Date,  VBC, and  following the
Merger Effective Date,  Oneida Savings,  shall use their respective best efforts
in good faith to obtain such favorable determination letter (including,  but not
limited to, making such changes to the ESOP and the proposed  allocations as may
be  requested  by  the  IRS  as a  condition  to  its  issuance  of a  favorable
determination  letter).  Prior to the Merger

                                       45
<PAGE>

Effective  Date, VBC, and following the Merger  Effective Date,  Oneida Savings,
will adopt such amendments to the VBC ESOP as may be reasonably  required by the
IRS  as  a  condition  to  granting  such  favorable   determination  letter  on
termination.  Neither  VBC,  prior to the  Merger  Effective  Date,  nor  Oneida
Savings,  following the Merger Effective Date, shall make any distribution  from
the VBC ESOP except as may be required by  applicable  law until receipt of such
favorable  determination letter.  Following receipt of a favorable determination
letter from the IRS,  participants  in the VBC ESOP may elect to make a tax-free
direct  rollover of their VBC ESOP account to the Oneida 401(k) Plan  (described
below).  In the case of a conflict  between  the terms of this  Section  and the
terms of the VBC ESOP, the terms of the VBC ESOP shall control;  however, in the
event of any such  conflict,  VBC before the Merger  Effective  Date, and Oneida
Savings,  after the Merger Effective Date, shall use their best efforts to cause
the VBC ESOP to be amended to conform to the requirements of this Section.

                           (B) Oneida ESOP.  All VBC  Continuing  Employees  who
                               -----------
become Oneida Financial (or Subsidiary)  employees shall become  participants in
The Oneida  Savings  Bank  Employee  Stock  Ownership  Plan  ("Oneida  ESOP") in
accordance  with the terms of the Oneida ESOP and shall not be given  credit for
any purpose  under the Oneida ESOP for service with VBC (or a VBC  subsidiary or
any predecessor thereto) prior to the Merger Effective Date.

                           (C) Oneida 401(k) Plan. All VBC Continuing  Employees
                               ------------------
who become Oneida Financial (or Subsidiary)  employees shall become participants
in The Oneida  Savings Bank 401(k)  Savings Plan  ("Oneida  401(k) Plan") on the
same terms and conditions as are applicable to employees of Oneida  Financial(or
Subsidiary).  In addition,  VBC Continuing Employees shall be given credit under
the  Oneida  401(k)  Plan  for  service  with  VBC (or a VBC  subsidiary  or any
predecessor  thereto)  prior  to the  Merger  Effective  Date  with  respect  to
determining eligibility and vesting, but not with respect to determining benefit
accrual.

                           (D) Oneida Retirement  Accumulation  Plan. The Oneida
                               -------------------------------------
Retirement  Accumulation Plan is a cash-balance type defined benefit plan, which
was frozen with  respect to accrual of benefits in June 2004.  Accordingly,  VBC
employees will not participate in this Plan.

                           (E)  NY  State  Bankers   Retirement   System  Volume
                                ------------------------------------------------
Submitter  Plan.  This Plan is a frozen  defined  benefit  plan that only covers
---------------
employees of State Bank. Accordingly, VBC employees will not participate in this
Plan.

                  (3) VBC Nonqualified Deferred Compensation Plans.
                      --------------------------------------------

                           (A) Gilbert Deferred  Compensation Plan. Prior to the
                               -----------------------------------
Merger Effective Date, Vernon Bank shall terminate or cause to be terminated The
National  Bank of Vernon  Supplemental  Executive  Retirement  Agreement for Mr.
Jeffrey S.  Gilbert,  dated as of  December  12,  2005  ("Gilbert  SERP").  As a
condition to entering into this Agreement,  contemporaneously with the execution
of  this  Agreement,   Mr.  Gilbert  shall  enter  into  a  written

                                       46
<PAGE>

agreement,  satisfactory  to  Oneida  Financial  and  subject  to  any  required
regulatory  approval or  non-objection,  agreeing to the amount of a  settlement
regarding the Gilbert SERP and releasing  Vernon Bank, VBC, Oneida Financial and
Oneida  Savings,  and  their  affiliates,   from  any  and  all  claims  arising
thereunder.

                           (B)  Magnusson  Deferred  Compensation  Plan.  Oneida
                                ---------------------------------------
Financial  and  Oneida  Savings  agree  to  honor  the  terms  of  the  Deferred
Compensation  Agreement  between  Mr.  Michael  Magnusson  and Vernon Bank dated
November  12, 2003 and agree to pay the amount due  pursuant  to such  agreement
upon termination of such agreement,  subject to any required regulatory approval
or non-objection  and Mr.  Magnusson's  signing of an  acknowledgment of payment
satisfactory to Oneida Financial and Oneida Savings.

                           (C)  Thaler  Deferred   Compensation   Plan.   Oneida
                                --------------------------------------
Financial and Oneida  Savings  agree to honor the terms of that certain  Amended
and Restated Deferred Compensation  Agreement between Vernon Bank and Richard A.
Thaler  (former  President  and Chief  Executive  Officer of Vernon  Bank) dated
August 3, 1992 ("Thaler SERP"),  subject to any required  regulatory approval or
non-objection.

                           (D)  Director  Deferred  Compensation  Plans.  Oneida
                                ---------------------------------------
Financial and Oneida Savings agree to honor the terms of those certain  Deferred
Compensation  Agreements  between  Vernon Bank and (i) Richard A. Thaler,  dated
December 29, 1988 ("Thaler  Director SERP");  (ii) David Rapke,  dated March 13,
1989 ("Rapke  Director  SERP);  and (iii) Thomas  Malecki,  dated March 15, 1989
("Malecki  Director  SERP")"),  subject to any required  regulatory  approval or
non-objection.

                           (E)  Director   Emeritus   Retirement  Plan.   Oneida
                                --------------------------------------
Financial and Oneida  Savings agree to honor the terms of the Director  Emeritus
Agreement entered into between Vernon Bank and Gene Ford,  effective February 1,
2006, and between Vernon Bank and George Trost,  effective March 1, 2006,  under
which  Messrs.  Ford and Trost will each  receive  $220 per month for 60 months,
subject to any required regulatory approval or non-objection.

                  (4) Split  Dollar  Agreements.  Prior to the Merger  Effective
                      -------------------------
Date, Vernon Bank shall terminate or cause to be terminated all supplemental and
split dollar life insurance agreements between Vernon Bank and its employees and
directors,  including the agreements with Messrs.  Gilbert,  Malecki,  Rapke and
Thaler. As a condition to entering into this Agreement,  contemporaneously  with
the execution of this  Agreement,  Messrs.  Gilbert,  Malecki,  Rapke and Thaler
shall each enter into a written agreement,  satisfactory to Oneida Financial and
subject to any  required  regulatory  approval or  non-objection,  agreeing to a
settlement of the split dollar agreements and releasing Vernon Bank, VBC, Oneida
Financial  and Oneida  Savings,  and their  affiliates,  from any and all claims
arising thereunder.

         (b)      Employment Agreements.
                  ---------------------

                  (1)  Jeffrey  Gilbert.  As a condition  to entering  into this
                       ----------------
Agreement,  contemporaneously with the execution of this Agreement,  Mr. Jeffrey
S. Gilbert,  President and Chief Executive Officer of Vernon Bank, shall deliver
to  Oneida  Financial  and  Oneida  Savings

                                       47
<PAGE>

an executed  written  agreement,  satisfactory  to Oneida  Financial  and Oneida
Savings, and subject to any required regulatory approval or non-objection, which
shall  be  effective  on  the  Merger  Effective  Date,  (i)  acknowledging  the
termination  of the  employment  agreement  between Mr.  Gilbert and Vernon Bank
dated  December 9, 2002;  (ii) agreeing to the amount of a settlement  regarding
such  employment  agreement;  and  (iii)  releasing  Vernon  Bank,  VBC,  Oneida
Financial  and  Oneida  Savings  and their  affiliates,  from any and all claims
arising thereunder.

                  (2) Michael  Magnusson.  Oneida  Financial and Oneida  Savings
                      ------------------
agree to honor the terms of the employment agreement dated July 25, 2003 between
Vernon Bank and Mr.  Michael  Magnusson,  Senior  Lending  Officer and Community
Banking Division Manager of Vernon Bank and agree to pay the amount of severance
due upon  termination  of such  employment  agreement,  subject to any  required
regulatory   approval  or  non-objection  and  Mr.  Magnusson's  signing  of  an
acknowledgment of payment satisfactory to Oneida Financial and Oneida Savings.

                  (3) Holly Kann and Paula  Demo.  Oneida  Financial  and Oneida
                      --------------------------
Savings agree to honor the terms of the employment agreement dated April 3, 2004
between  Vernon  Bank and Ms.  Holly Kann,  Vice  President  and  Administrative
Services Division Manager of Vernon Bank, and Ms. Paula Demo, Vice President and
Banking  Operations  Division Manager of Vernon Bank and agree to pay the amount
of severance due upon termination of such employment agreements,  subject to any
required  regulatory  approval or  non-objection  and Ms.  Kann's and Ms. Demo's
signing of an  acknowledgment  of payment  satisfactory to Oneida  Financial and
Oneida Savings.

         (c)  Compliance  with Tax Code.  Notwithstanding  any provision in this
              -------------------------
Agreement to the contrary,  to the extent that any payment to be made  hereunder
to any individual would constitute an "excess parachute  payment," as defined in
Internal Revenue Code Section 280G and the regulations thereunder,  such payment
shall be automatically reduced to an amount that is one dollar ($1.00) less than
the  amount  which  would have  caused  the  payment to be treated as an "excess
parachute  payment." In  addition,  no payment  shall be made to any  individual
under this Section 5.11 to the extent such payment is  non-deductible  under the
Internal Revenue Code by Oneida Financial or Oneida Savings.

         (d) VBC  Representative  on  Oneida  Boards.  As  soon  as  practicable
             ---------------------------------------
following  the Merger  Effective  Date,  and subject to any required  regulatory
approval or  non-objection,  Oneida  Financial and Oneida Savings shall offer to
appoint  one  current  member of the board of  directors  of VBC to the Board of
Directors of Oneida  Financial  and Oneida  Savings,  and shall further offer to
re-nominate  such  person  for  election  to a three  year  term to the board of
directors  at the first  annual  meeting of  stockholders  following  the Merger
Effective  Date. At the  discretion of Oneida  Financial and Oneida Savings said
person may be re-nominated  for additional  terms upon completion of his term of
office.

         Section 5.12      Duty to Advise; Duty to Update Oneida Financial's
Disclosure Schedules

         Oneida Financial shall promptly advise VBC of any change or event which
it  believes  would or would  be  reasonably  likely  to cause or  constitute  a
material breach of any of its

                                       48
<PAGE>

representations,  warranties  or covenants set forth  herein.  Oneida  Financial
shall update ONEIDA FINANCIAL'S  DISCLOSURE SCHEDULES as promptly as practicable
after  the  occurrence  of an event  or fact  which,  if such  event or fact had
occurred prior to the date of this  Agreement,  would have been disclosed in the
ONEIDA  FINANCIAL  DISCLOSURE  SCHEDULE.  The delivery of such updated  Schedule
shall  not  relieve  Oneida  Financial  from any  breach  or  violation  of this
Agreement  and shall not have any effect for the  purposes  of  determining  the
satisfaction of the condition set forth in Sections 6.01(c) hereof.

         Section 5.13      Bank and Related Merger Transactions

         (a) As soon as practicable  following the Merger Effective Date, Oneida
Savings  shall,  and it shall  cause VBC (as the  Surviving  Corporation  in the
Merger) to, effect the Company  Liquidation  by filing a certificate of complete
liquidation or other appropriate  documentation  with the New York Department of
State pursuant to the NYBCL. The Company  Liquidation  shall become effective at
the time (the  "Subsequent  Effective  Time")  specified in the  certificate  of
complete liquidation and/or other appropriate documentation.  As a result of the
Company  Liquidation,  the separate  corporate  existence of VBC shall cease and
Oneida Savings shall acquire all of the assets and liabilities of VBC.

         (b) As soon as practicable  following the  consummation  of the Company
Liquidation,  Vernon Bank shall transfer its assets and liabilities  (other than
municipal deposits and certain permitted assets) to Oneida Savings, and the Bank
Merger shall be effected by executing a merger  agreement and filing articles of
merger or  certificates  of merger with the OCC and the New York  Department  of
State or  Department  pursuant to  applicable  law. The Bank Merger shall become
effective at the time  specified  in the articles of merger.  As a result of the
Bank  Merger,  the separate  corporate  existence of Vernon Bank shall cease and
State Bank shall be the  surviving  bank and  continue its  corporate  existence
under the laws of the State of New York.

                              ARTICLE VI-CONDITIONS

         Section 6.01      Conditions to Each Party's Obligations under this
Agreement

         The respective  obligations of each party under this Agreement shall be
subject to satisfaction at or prior to the Closing Date of each of the following
conditions, none of which may be waived:

         (a)  Stockholder   Approval.   This  Agreement  and  the   transactions
contemplated  hereby  shall  have been  approved  by the  requisite  vote of the
stockholders  of VBC in accordance  with applicable laws and regulations and the
Certificate of Incorporation and Bylaws of VBC:

         (b) Corporate  Proceedings.  All action  required to be taken by, or on
the part of,  each party  hereto,  to  authorize  the  execution,  delivery  and
performance  of  this  Agreement,  and  the  consummation  of  the  transactions
contemplated by this  Agreement,  shall have been duly and validly taken by each
party;  and  the  other  party  shall  have  received  certified  copies  of the
resolutions evidencing such authorizations;

                                       49
<PAGE>

         (c) Regulatory Approvals.  All required Regulatory Approvals shall have
been obtained and shall remain in full force and effect and all waiting  periods
relating  thereto  shall have expired;  and no such  Regulatory  Approval  shall
include any  condition  or  requirement  that in Oneida  Financial's  reasonable
judgment is unduly burdensome,  and which shall include any condition that would
cause Oneida Financial to become a Bank Holding Company under the BHCA.

         (d)  Injunctions.  None of the parties  hereto  shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction,  and
no statute,  rule or regulation shall have been enacted,  entered,  promulgated,
interpreted,  applied or enforced by any Regulatory  Authority,  that enjoins or
prohibits the consummation of the transactions contemplated by this Agreement.

         Section 6.02      Conditions to VBC's Obligations under this Agreement

         The obligations of VBC hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions,  unless waived by
VBC pursuant to Section 8.03 hereof:

         (a) Covenants.  The obligations  and covenants of Oneida  Financial and
Oneida Savings  required by this  Agreement to be performed by Oneida  Financial
and  Oneida  Savings  at or prior to the  Closing  Date  shall  have  been  duly
performed and complied with in all material respects;

         (b)  Representations  and Warranties.  Each of the  representations and
warranties  of Oneida  Financial  in this  Agreement  which is  qualified  as to
materiality shall be true and correct,  and each such representation or warranty
that is not so qualified shall be true and correct in all material respects,  in
each case as of the date of this  Agreement,  and  (except  to the  extent  such
representations  and  warranties  speak as of an earlier  date) as of the Merger
Effective Date;

         (c) Officer's Certificate. Oneida Financial shall have delivered to VBC
a certificate,  dated the Closing Date and signed,  by its chairman of the board
or president without personal  liability,  to the effect that the conditions set
forth in Sections 6.01 and 6.2 have been satisfied, to the best knowledge of the
officer executing the same;

         (d) Payment of Merger Consideration. Oneida Financial shall have caused
the Merger  Consideration to be delivered to the Exchange Agent on or before the
Closing  Date and the  Exchange  Agent  shall  provide  VBC  with a  certificate
evidencing such delivery.

         Section 6.03      Conditions to Oneida Financial's and Oneida Savings'
Obligations under this Agreement

         The obligations of Oneida Financial and Oneida Savings  hereunder shall
be  subject  to  satisfaction  at or  prior to the  Closing  Date of each of the
following  conditions,  unless  waived by Oneida  Financial  and Oneida  Savings
pursuant to Section 8.03 hereof:

                                       50
<PAGE>

         (a)  Covenants.  The  obligations  and covenants of VBC and Vernon Bank
required by this Agreement to be performed at or prior to the Closing Date shall
have been duly performed and complied with in all material respects;

         (b)  Representations  and Warranties.  Each of the  representations and
warranties  of VBC and Vernon Bank in this  Agreement  which is  qualified as to
materiality shall be true and correct,  and each such representation or warranty
that is not so qualified shall be true and correct in all material respects,  in
each case as of the date of this  Agreement,  and  (except  to the  extent  such
representations  and  warranties  speak as of an earlier  date) as of the Merger
Effective Date;

         (c) No Material  Adverse Effect.  Except as set forth in VBC DISCLOSURE
SCHEDULE  3.07,  since  December  31,  2005,  there shall not have  occurred any
Material Adverse Effect with respect to VBC;

         (d) Officer's Certificate. VBC shall have delivered to Oneida Financial
a certificate,  dated the Closing Date and signed,  by its chairman of the board
or president without personal  liability,  to the effect that the conditions set
forth in Sections 6.01 and 6.03 have been  satisfied,  to the best  knowledge of
the officer executing the same; and

         (e)  Dissenters'  Rights.  The  holders  of not  more  than  10% of the
outstanding VBC Common Stock have dissented from the Merger and preserved, as of
the Merger  Effective Date, the right to pursue their right of appraisal for the
fair value of their shares under New York law.

         (f) Employee and  Termination  Benefits.  Oneida  Financial  and Oneida
Savings shall have received satisfactory evidence that all of VBC's employee and
termination  benefits have been treated as  contemplated by Section 5.11 of this
Agreement.


                  ARTICLE VII-TERMINATION, WAIVER AND AMENDMENT

         Section 7.01      Termination

         This Agreement may be terminated on or at any time prior to the Closing
Date whether before or after approval of the  stockholders of VBC referred to in
Section 5.10(a)(vii) hereof:

         (a) by  mutual  written  consent  of the  parties  authorized  by their
respective boards of managers/directors;

         (b) by Oneida  Financial or VBC (i) if the Merger  Effective Date shall
not  have  occurred  on or  prior  to  May  31,  2007,  (ii)  if a  vote  of the
stockholders  of VBC is  taken  and  such  stockholders  fail  to  approve  this
Agreement at the meeting of  stockholders  (or any  adjournment  thereof) of VBC
contemplated by Section 5.10(a)(vii) hereof, or (iii) any applicable  regulatory
authority formally disapproves the issuance of any required regulatory approval,
unless in the case of clause (ii) of this Section 7.01(b) such failure is due to
the  failure of the party  seeking to  terminate  this  Agreement  to perform or
observe its  agreements  set forth  herein to be  performed  or observed by such
party on or before such meeting of  stockholders,  and in the case of clause (i)

                                       51
<PAGE>

of this Section  7.01(b),  the right to terminate  shall not be available to any
party whose failure to perform an obligation  under this  Agreement has been the
cause of, or resulted  in, the failure of the Merger and the other  transactions
contemplated hereby to be consummated by May 31, 2007.

         (c) by Oneida  Financial if (i) at the time of such  termination any of
the  representations and warranties of VBC contained in this Agreement shall not
be true and  correct  to the  extent  that the  conditions  set forth in Section
6.02(a)  or (b)  hereof  cannot  be  satisfied,  prior to the date set  forth in
Section 7.01(b), (ii) there shall have been any material breach of any covenant,
agreement or  obligation  of VBC  hereunder  and such breach shall have not been
remedied by VBC or any third-party  within thirty (30) days after receipt by VBC
of notice in writing from Oneida Financial  specifying the nature of such breach
and requesting that it be remedied,  (iii) any applicable  regulatory  authority
approves the transactions  contemplated  but with conditions  attached such that
the  requirements of Section 6.01(c) are not satisfied,  (iv) VBC has received a
Superior  Proposal,  and in accordance with Section 5.06 of this Agreement,  the
Board of Directors of VBC has entered into an acquisition agreement with respect
to the Superior  Proposal or withdraws  its  recommendation  of this  Agreement,
fails to make such recommendation or modifies or qualifies its recommendation in
a manner  adverse  to  Oneida  Financial,  or (v) any event  occurs  such that a
condition  set forth in  Sections  6.01 or 6.03 hereof  which must be  fulfilled
before  Oneida  Financial  is  obligated  to  consummate  the  Merger  cannot be
fulfilled and non-fulfillment is not waived by Oneida Financial.

         (d)  by  VBC  if  (i)  at  the  time  of  such  termination  any of the
representations  and warranties of Oneida Financial  contained in this Agreement
shall not be true and  correct to the extent  that the  conditions  set forth in
Section  6.01(a)  and/or (b) hereof cannot be  satisfied,  prior to the date set
forth in Section 7.01(b),  (ii) there shall have been any material breach of any
covenant,  agreement or obligation of Oneida Financial hereunder and such breach
shall not have been  remedied  within  thirty (30) days after  receipt by Oneida
Financial of notice in writing from VBC specifying the nature of such breach and
requesting that it be remedied, (iii) any event occurs such that a condition set
forth in Sections  6.01 or 6.03  hereof  which must be  fulfilled  before VBC is
obligated to consummate  the Merger cannot be fulfilled and  non-fulfillment  is
not  waived  by VBC,  or (iv)  VBC has  received  a  Superior  Proposal,  and in
accordance  with Section 5.06 of this  Agreement,  the Board of Directors of VBC
has made a determination  to accept such Superior  Proposal  subject to approval
thereof by the VBC's  stockholders,  and simultaneously  with the termination of
this  Agreement  pursuant  to this  subsection  VBC enters  into an  acquisition
agreement  with respect to the Superior  Proposal;  provided  that VBC shall not
terminate this  Agreement  pursuant to this Section  7.01(d)(iv)  and enter in a
definitive  agreement with respect to the Superior Proposal until the expiration
of five (5) business days following Oneida Financial's receipt of written notice
advising Oneida Financial that VBC has received a Superior Proposal,  specifying
the material  terms and  conditions of such Superior  Proposal (and  including a
copy thereof with all accompanying documentation, if in writing) identifying the
person  making the Superior  Proposal  and stating  whether VBC intends to enter
into a  definitive  agreement  with  respect  to the  Superior  Proposal.  After
providing  such notice,  VBC shall  provide a reasonable  opportunity  to Oneida
Financial  during the five day period to make such  adjustments in the terms and
conditions  of this  Agreement as would enable VBC to proceed with the Merger on
such adjusted terms.

                                       52
<PAGE>

         Section 7.02      Effect of Termination

         If this Agreement is terminated  pursuant to Section 7.01 hereof,  this
Agreement shall forthwith become void (other than the confidentiality provisions
of Section  5.02(a) and (d) and Section 8.01 hereof,  which shall remain in full
force and  effect),  and except as otherwise  provided  herein there shall be no
further liability on the part of any of Oneida  Financial,  Oneida Savings or of
VBC or Vernon Bank, or their respective officers, directors and employees.

                           ARTICLE VIII-MISCELLANEOUS

         Section 8.01      Expenses

         (a) Except as provided herein, each party hereto shall bear and pay all
costs  and  expenses   incurred  by  it  in  connection  with  the  transactions
contemplated   hereby,   including  fees  and  expenses  of  its  own  financial
consultants,  accountants  and counsel.  In the event of any termination of this
Agreement pursuant to Section  7.01(b)(i),  7.01(c)(i) or (ii), or 7.01(d)(i) or
(ii)  hereof  because  of a willful  breach  of a  representation,  warranty  or
covenant  contained in this Agreement by one of the parties,  and in addition to
any other damages and remedies that may be available to the non-breaching party,
the non-breaching party shall be entitled to payment of, and the breaching party
shall pay to the  non-breaching  party,  all  out-of-pocket  costs and expenses,
including,  without  limitation,  reasonable  legal,  accounting  and investment
banking fees and  expenses,  incurred by the  non-breaching  party in connection
with  entering  into  this  Agreement  and  carrying  out of any  and  all  acts
contemplated hereunder up to a maximum of $150,000; provided, however, that this
clause shall not be  construed to relieve or release a breaching  party from any
additional  liabilities  or damages  arising  out of its  willful  breach of any
provision of this Agreement.

         (b) As a condition of Oneida Financial's  willingness,  and in order to
induce Oneida  Financial to enter into this  Agreement  and to reimburse  Oneida
Financial  for  incurring  the costs and expenses  related to entering into this
Agreement and consummating the transactions  contemplated by this Agreement, VBC
hereby agrees to pay Oneida Financial, and Oneida Financial shall be entitled to
payment of a fee of  $500,000  (the  "Fee"),  within  five  business  days after
written demand for payment is made by Oneida Financial, following the occurrence
of any of the events set forth below:

         (i) VBC terminates  this Agreement  pursuant to Section  7.01(d)(iv) or
Oneida Financial terminates this Agreement pursuant to Section 7.01(c)(iv); or

         (ii) the  entering  into a  definitive  agreement by VBC relating to an
Acquisition  Proposal or the consummation of an Acquisition  Proposal  involving
VBC within twelve (12) months after the occurrence of any of the following:  (A)
the  termination  of the  Agreement  by Oneida  Financial  pursuant  to  Section
7.01(c)(ii);  (B)  the  failure  of the  stockholders  of VBC  to  approve  this
Agreement after the occurrence of an Acquisition  Proposal;  or (C) May 31, 2007
if prior thereto the VBC stockholders have not adopted of this Agreement.

                                       53
<PAGE>

         If demand  for  payment  of the Fee is made  pursuant  to this  Section
8.01(b) and payment is timely  made,  then  Oneida  Financial  will not have any
other  rights or claims  against  VBC, its  Subsidiaries,  and their  respective
officers,  directors,  attorneys and financial  advisors  under this  Agreement,
other than pursuant to Section  8.01(a),  it being agreed that the acceptance of
the Fee under this Section 8.01(b) will constitute the sole and exclusive remedy
of Oneida Financial against VBC, its Subsidiaries and their respective officers,
directors,  attorneys  and  financial  advisors  other than  pursuant to Section
8.01(a).

         Section 8.02      Non-Survival of Representations and Warranties

         All representations,  warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants,  other than those covenants
set forth in Article  II, and  Section  5.02(d),  the last  sentence  of Section
5.02(a),  Sections  5.05,  5.11,  and  5.13(a) and (b),  which will  survive the
Merger, shall terminate on the Closing Date.

         Section 8.03      Amendment, Extension and Waiver

         Subject to applicable law, at any time prior to the consummation of the
transactions  contemplated  by this  Agreement,  the  parties may (a) amend this
Agreement,  (b) extend the time for the performance of any of the obligations or
other  acts  of  either  party  hereto,   (c)  waive  any  inaccuracies  in  the
representations  and warranties  contained  herein or in any document  delivered
pursuant  hereto,  or  (d)  waive  compliance  with  any of  the  agreements  or
conditions  contained  in  Articles  V and VI  hereof  or  otherwise:  provided,
however,  that  after any  approval  of the  transactions  contemplated  by this
Agreement by VBC's  stockholders,  there may not be, without further approval of
such  stockholders,  any amendment of this Agreement which reduces the amount or
changes  the  form of the  consideration  to be  delivered  to VBC  stockholders
hereunder other than as  contemplated by this Agreement.  This Agreement may not
be amended  except by an  instrument  in writing  authorized  by the  respective
Boards of Directors and signed,  by duly authorized  officers,  on behalf of the
parties hereto.  Any agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth in an instrument in writing  signed by a
duly authorized  officer on behalf of such party,  but such waiver or failure to
insist on  strict  compliance  with  such  obligation,  covenant,  agreement  or
condition  shall not  operate as a waiver of, or estoppel  with  respect to, any
subsequent or other failure.

         Section 8.04      Entire Agreement

         This Agreement,  including the documents and other writings referred to
herein  or  delivered  pursuant  hereto,   contains  the  entire  agreement  and
understanding of the parties with respect to its subject matter.  This Agreement
supersedes all prior arrangements and understandings  between the parties,  both
written or oral with respect to its subject  matter.  This Agreement shall inure
to the benefit of and be binding  upon the parties  hereto and their  respective
successors;  provided,  however,  that nothing in this  Agreement,  expressed or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors,  any rights,  remedies,  obligations or liabilities
other than pursuant to Sections 2.02, 2.03, 5.05 and 5.11.

                                       54
<PAGE>

         Section 8.05      No Assignment

         Neither  party  hereto  may  assign  any of its  rights or  obligations
hereunder to any other person,  without the prior  written  consent of the other
party hereto.

         Section 8.06      Notices

         All notices or other  communications  hereunder shall be in writing and
shall be deemed given if delivered  personally,  mailed by prepaid registered or
certified mail (return  receipt  requested),  or sent by telecopy,  addressed as
follows:

         (a)      If to Oneida Financial Corp. to:
                           Oneida Financial Corp.
                           182 Main Street
                           Oneida, New York 13421-1676
                           Attention:  Michael R. Kallet
                                       President and Chief Executive Officer

                  with a copy to:
                           Luse Gorman Pomerenk & Schick, PC
                           5335 Wisconsin Avenue, NW
                           Washington, D.C. 20015
                           Attention:  Eric Luse, Esq.
                                       Alan Schick, Esq.

         (b)      If to Vernon Bank Corporation to:
                           Vernon Bank Corporation
                           5238 West Seneca Street
                           P.O  Box 890
                           Vernon, NY 13476-0890
                           Attention:  Jeffrey S. Gilbert
                                       President and Chief Executive Officer


                  with a copy to:
                           Bond, Schoeneck & King
                           One Lincoln Center
                           Syracuse, NY 13202-1355
                           Attention:  George J. Getman, Esq.

         Section 8.07      Captions

         The captions  contained in this  Agreement are for  reference  purposes
only and are not part of this Agreement.

                                       55
<PAGE>

         Section 8.08      Counterparts

         This Agreement may be executed in any number of counterparts,  and each
such  counterpart  shall be deemed to be an  original  instrument,  but all such
counterparts together shall constitute but one agreement.

         Section 8.09      Severability

         If any provision of this  Agreement or the  application  thereof to any
person or  circumstance  shall be invalid or  unenforceable  to any extent,  the
remainder of this  Agreement  and the  application  of such  provisions to other
persons or circumstances  shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.

         Section 8.10      Specific Performance

         The parties  hereto  agree that  irreparable  damage would occur in the
event  that  any of the  provisions  of this  Agreement  were not  performed  in
accordance  with  their  specific  terms  or  were  otherwise  breached.  It  is
accordingly  agreed that the  parties  shall be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and provisions  hereof,  this being in addition to any other remedy to
which they are entitled at law or in equity.

         Section 8.11      Governing Law

         This  Agreement  shall be governed by and construed in accordance  with
the domestic  internal law  (including the law of conflicts of law) of the State
of New York,  except to the extent  federal law and  regulations  applicable  to
financial institutions shall be controlling.


                                       56
<PAGE>


         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed  by their duly  authorized  officers as of the day and year first above
written.

         ONEIDA FINANCIAL CORP.



         By:      /s/ Michael R. Kallet
                  -------------------------------------
                  Michael R. Kallet
                  President and Chief Executive Officer


         THE ONEIDA SAVINGS BANK



         By:      /s/ Michael R. Kallet
                  -------------------------------------
                  Michael R. Kallet
                  President and Chief Executive Officer


         VERNON BANK CORPORATION



         By:      /s/ Jeffrey S. Gilbert
                  -------------------------------------
                  Jeffrey S. Gilbert
                  President and Chief Executive Officer


         THE NATIONAL BANK OF VERNON



         By:      /s/ Jeffrey S. Gilbert
                  -------------------------------------
                  Jeffrey S. Gilbert
                  President and Chief Executive Officer



                                       57
<PAGE>




                                    EXHIBIT A

                              VBC VOTING AGREEMENT




                                       58
<PAGE>


                               September 12, 2006

Oneida Financial Corp.
182 Main Street
Oneida, New York 13421-1676

Ladies and Gentlemen:

         Oneida  Financial  Corp.  ("Oneida  Financial"),  Oneida  Savings  Bank
("Oneida  Savings"),  Vernon Bank  Corporation  ("VBC") and The National Bank of
Vernon  ("Vernon  Bank") have entered into an Agreement and Plan of Merger dated
as of September 12, 2006 (the "Merger Agreement"), pursuant to which, subject to
the terms and conditions set forth therein,  (i) Oneida Savings will incorporate
Oneida Merger  Corp.,  which will merge with and into VBC with VBC surviving the
merger  (referred to as the "Merger"),  and (ii) subsequent  thereto VBC will be
liquidated into Oneida Savings, with the result that Oneida Savings will acquire
the  assets and  liabilities  of VBC and VBC shall  cease to exist.  Immediately
thereafter,  the assets and  liabilities  of Vernon Bank  (other than  municipal
deposits and certain  permitted  assets) will be transferred to Oneida  Savings,
and  Vernon  Bank will  merge  with and into  Oneida  Savings'  commercial  bank
subsidiary,  State Bank of Chittenango  ("State  Bank"),  with State Bank as the
surviving bank (the "Bank Merger"). In connection with the Merger, each share of
VBC which is outstanding immediately prior to consummation of the Merger (except
as otherwise provided in the Merger Agreement) shall be automatically  converted
into the right to receive $54.00 per share without interest.

         Oneida  Financial  has  requested,  as a condition to its execution and
delivery to VBC of the Merger Agreement,  that the undersigned,  being directors
and  executive  officers of VBC,  execute and deliver to Oneida  Financial  this
Letter Agreement.

         Each of the undersigned, in order to induce Oneida Financial to execute
and deliver to VBC the Merger Agreement, hereby irrevocably:

         (a) Agrees to be present  (in  person or by proxy) at all  meetings  of
shareholders of VBC called to vote for approval of the Merger  Agreement and the
Merger so that all shares of common stock of VBC then beneficially  owned by the
undersigned,  and as to which the undersigned has voting powers, will be counted
for the purpose of determining  the presence of a quorum at such meetings and to
vote all  such  shares  (i) in favor of  approval  and  adoption  of the  Merger
Agreement and the transactions contemplated thereby (including any amendments or
modifications  of the terms thereof  approved by the Board of Directors of VBC),
and (ii) against approval or adoption of any other merger, business combination,
recapitalization, partial liquidation or similar transaction involving VBC;

         (b)  Agrees not to vote or execute  any  written  consent to rescind or
amend in any manner any prior vote or written consent,  as a shareholder of VBC,
to approve or adopt the Merger Agreement;


<PAGE>

         (c) Agrees not to sell,  transfer  or  otherwise  dispose of any common
stock of VBC on or prior to the date of the meeting of VBC  shareholders to vote
on the Merger Agreement; and

         (d) Represents that the undersigned has the capacity to enter into this
Letter  Agreement  and that it is a valid  and  binding  obligation  enforceable
against the  undersigned  in accordance  with its terms,  subject to bankruptcy,
insolvency  and other laws  affecting  creditors'  rights and general  equitable
principles.

         The agreements of the undersigned  contained  herein shall apply to the
undersigned  solely in his  capacity as a  stockholder  of VBC, and no agreement
contained herein shall apply in his capacity as a director,  officer or employee
of VBC or in any other  capacity.  Nothing  contained  in this Letter  Agreement
shall be  deemed to apply to, or limit in any  manner,  the  obligations  of the
undersigned to comply with his fiduciary duties as a director or officer of VBC.

         The obligations set forth herein shall terminate  concurrently with any
termination of the Merger  Agreement.  In addition,  the  obligations  set forth
herein may be limited  to the  extent the  undersigned  or VBC is advised by the
Board of Governors of the Federal  Reserve or the Office of the  Comptroller  of
the Currency that this Letter Agreement is contrary to applicable banking law.


                          ----------------------------

         This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to  constitute an original,  but all of which  together
shall constitute one and the same Letter Agreement.


                          ----------------------------

         The undersigned has executed and delivered this Letter  Agreement as of
the date first written above intending to be legally bound hereby.


                                   Sincerely,


                                   --------------------------------------
                                   Name:
                                        ---------------------------------
                                   Title:
                                         --------------------------------


                                       60
<PAGE>




                                    EXHIBIT B

                            INTERIM MERGER AGREEMENT





                                       61
<PAGE>


                               AGREEMENT OF MERGER

         AGREEMENT  OF MERGER,  dated as  of_________,  2006 by and among Oneida
Savings Bank ("Oneida"),  Oneida Merger Corp. ("Interim"),  a corporation formed
by Oneida solely to facilitate the  transactions  contemplated by the Agreement,
defined below,  and Vernon Bank  Corporation  ("VBC"),  a New York  corporation.
Interim  and VBC  are  hereinafter  sometimes  collectively  referred  to as the
"Merging Corporations".

         This Agreement of Merger is being entered into pursuant to an Agreement
and Plan of Merger,  dated as of September  12, 2006 (the  "Agreement")  between
Oneida, Oneida Financial Corp., VBC and the National Bank of Vernon.

         In  consideration  of  the  premises,  and  the  mutual  covenants  and
agreements  contained  herein and in the Agreement,  the parties hereto agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

         Except as otherwise  provided herein,  the capitalized  terms set forth
below shall have the following meanings:

         1.1  "Effective   Time"  shall  mean  the  date  at  which  the  Merger
contemplated  by this  Agreement  of Merger  becomes  effective  as  provided in
Section 2.2 hereof.

         1.2 "Interim Common Stock" shall mean the common stock,  par value $.01
per share, of Interim owned by Oneida.

         1.3 "VBC Common Stock" shall mean the common stock, par value $5.00 per
share, of VBC.

         1.4 The "Merger" shall refer to the merger of Interim with and into VBC
as provided in Section 2.1 of this Agreement of Merger.

         1.5 "Stockholder Meeting" shall mean the meeting of the stockholders of
VBC held pursuant to Section 5.04(a) of the Agreement.

         1.6  "Surviving  Corporation"  shall  refer  to VBC  as  the  surviving
corporation of the Merger.


<PAGE>

ARTICLE II

                               TERMS OF THE MERGER

         2.1 The Merger.  Subject to the terms and  conditions  set forth in the
Agreement,  on the  Effective  Time,  Interim  shall be merged with and into VBC
pursuant  and subject to Section 904 of the New York  Business  Corporation  Law
("NYBCL").  VBC  shall be the  Surviving  Corporation  of the  Merger  and shall
continue to be governed by the laws of the State of New York.  On the  Effective
Time,  the  Surviving  Corporation  shall be  considered  the same  business and
corporate  entity  as  each  of  the  Merging  Corporations  and  thereupon  and
thereafter, all the property, rights, powers, and franchises of a public as well
as a  private  nature  of each of the  Merging  Corporations  shall  vest in the
Surviving  Corporation and the Surviving  Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities,  obligations and duties of
each of the  Merging  Corporations  and shall have  succeeded  to all of each of
their relationships,  fiduciary or otherwise, as fully and to the same extent as
if such property,  right, privileges,  powers,  franchises,  debts, obligations,
duties and relationships had been originally acquired,  incurred or entered into
by the  Surviving  Corporation.  In  addition,  any  reference  to either of the
Merging  Corporations  in any contract,  will or document,  whether  executed or
taking  effect  before  or after  the  Effective  Time,  shall be  considered  a
reference  to the  Surviving  Corporation  if not  inconsistent  with the  other
provisions of the contract,  will or document;  and any pending  action or other
judicial  proceeding  to which  either of the Merging  Corporations  is a party,
shall  not be deemed to have  abated  or to have  discontinued  by reason of the
Merger,  but may be  prosecuted to final  judgment,  order or decree in the same
manner as if the Merger had not been made; or the Surviving  Corporation  may be
substituted as a party to such action or proceeding,  and any judgment, order or
decree may be rendered  for or against it that might have been  rendered  for or
against either of the Merging Corporations if the Merger had not occurred.

         2.2 Effective  Time. The Merger shall become  effective on the date and
at the time that a Certificate of Merger pursuant to Section 904 of the NYBCL is
executed and filed with the Secretary of State of the State of New York,  unless
a later date and time is specified as the Effective  Time in the  Certificate of
Merger.

         2.3  Name of the  Surviving  Corporation.  The  name  of the  Surviving
Corporation shall be "Vernon Bank Corporation"

         2.4   Certificate  of   Incorporation.   At  the  Effective  Time,  the
Certificate of Incorporation of the Surviving  Corporation  shall be amended and
restated to read in its entirety as the Certificate of Incorporation of Interim,
as in effect  immediately prior to the Effective Time, except that Article First
thereof  shall be further  amended to replace the  reference  to "Oneida  Merger
Corp." therein with "Vernon Bank Corporation"

         2.5 Bylaws.  The Bylaws of the Surviving  Corporation  shall be amended
and  restated to read in their  entirety as the Bylaws of Interim,  as in effect
immediately  prior to the Merger  Time,  until  thereafter  altered,  amended or
repealed in accordance with applicable law.

         2.6 Directors and Officers of the Surviving Corporation.  The directors
and

                                       63
<PAGE>

officers of Interim  shall become the  directors  and officers of the  Surviving
Corporation as of the Effective Time, each to hold office in accordance with the
Certificate  of  Incorporation  and Bylaws of the  Surviving  Corporation  until
changed in accordance therewith.

                                   ARTICLE III

                              CONVERSION OF SHARES

         3.1 Conversion of VBC Common Stock.

         (a) VBC has  outstanding  210,447  shares of VBC Common  Stock,  all of
which are entitled to vote upon the Merger.

         (b) Interim has outstanding 100 shares of Interim Common Stock,  all of
which are entitled to vote upon the Merger.

         As of the  Effective  Time each share of VBC Common  Stock,  issued and
outstanding  immediately  prior to the  Effective  Time shall,  by virtue of the
Merger and without any action on the part of the holder  thereof,  be  converted
into the right to receive $54.00 in cash,  without interest  (referred to as the
"Merger Consideration").

         3.2 Exchange of Shares.

         (a) Oneida shall deliver  funds in payment of the Merger  Consideration
as  set  forth  in  Section  2.03  of  the  Agreement  in  connection  with  the
cancellation of VBC Common Stock.

         (b) After the Effective Time,  there shall be no transfers on the stock
transfer  books of VBC of the shares of VBC Common Stock which were  outstanding
immediately  prior to the Effective Time and, if any  Certificates  representing
such  shares are  presented  for  transfer to VBC,  they shall be  canceled  and
exchanged for the Merger Consideration provided for in Section 3.1 hereof.

         (c) If payment  of the Merger  Consideration  pursuant  to Section  3.1
hereof for shares of VBC Common Stock is to be made in a name other than that in
which the Certificate  surrendered in exchange therefor is registered,  it shall
be a condition of such  payment that the  Certificate  so  surrendered  shall be
properly endorsed (or accompanied by an appropriate  instrument of transfer) and
otherwise  in proper  form for  transfer,  and that the person  requesting  such
payment  shall pay to VBC in advance any  transfer  or other  taxes  required by
reason of the payment to a person  other than that of the  registered  holder of
the  Certificate  surrendered,  or  required  for any  other  reason,  or  shall
establish  to the  satisfaction  of VBC that  such  tax has been  paid or is not
payable.

         3.3 Interim  Common Stock.  Each share of Interim Common Stock which is
issued  and  outstanding  immediately  prior  to the  Effective  Time  shall  be
converted automatically and without any action on the part of the holder thereof
into  an  issued  and  outstanding  share  of  Common  Stock  of  the  Surviving
Corporation.

                                       64
<PAGE>

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.1  Conditions  Precedent.  The  respective  obligations of each party
under this Plan of Merger shall be subject to the satisfaction, or waiver by the
party  permitted  to do so, of the  conditions  set forth in  Article  VI of the
Agreement.

         4.2 Stockholder Approval. By executing this Agreement of Merger, Oneida
shall be deemed to have  approved  this  Agreement  of Merger in its capacity as
sole stockholder of Interim.

         4.3 Termination.  This Agreement of Merger shall be terminated upon the
termination of the Agreement in accordance  with Article VII thereof;  provided,
that any such  termination  of this  Agreement  of Merger  shall not relieve any
party  hereto from  liability on account of a breach by such party of any of the
terms hereof or thereof.

         4.4  Amendments.  To the extent  permitted  by law,  this  Agreement of
Merger may be  amended  by a  subsequent  writing  signed by all of the  parties
hereto  upon the  approval  of the  Board of  Directors  of each of the  parties
hereto; provided,  however, that the provisions of Article III of this Agreement
of Merger relating to the  consideration to be paid for all of the shares of VBC
Common Stock shall not be amended after the approval of the  stockholders of VBC
referred to in Section  5.04(a) of the Agreement so as to decrease the amount or
change the form of such  consideration  without the approval of the stockholders
of VBC.

         4.5  Successors.  This  Agreement  of Merger  shall be  binding  on the
successors of Oneida, Interim and VBC.



                                       65
<PAGE>

         IN WITNESS WHEREOF,  Oneida, Interim and VBC have caused this Agreement
of Merger to be executed by their duly  authorized  officers and their corporate
seals to be hereunto affixed as of the date first above written.

                                          ONEIDA SAVINGS BANK

Attest:



                                   By:
-------------------------------           -------------------------------------
Eric E. Stickels                          Michael R. Kallet
Corporate Secretary                       President and Chief Executive Officer



                                          ONEIDA MERGER CORP.
Attest:



                                   By:
-------------------------------           -------------------------------------
Eric E. Stickels                          Michael R. Kallet
Corporate Secretary                       President and Chief Executive Officer



                                          VERNON BANK CORPORATION
Attest:



                                   By:
-------------------------------           -------------------------------------
Holly Kann                                Jeffrey S. Gilbert
Secretary                                 President and Chief Executive Officer


                                       66