Exhibit 10.13

 

CHANGE OF CONTROL AGREEMENT

            THIS AGREEMENT  is made as of January 1, 2005 by and between (i)
ALLIANCE FINANCIAL CORPORATION, a New York corporation and registered bank
holding company (“Corporation”) and ALLIANCE BANK, N.A. a wholly owned
subsidiary of the Corporation (“Bank”), having a principal place of business at
120 Madison Street, Syracuse, Onondaga County, New York, (the Corporation and
the Bank are referred to collectively in this agreement as the “Employer”), and
(ii) CONNIE M. WHITTON currently residing in Manlius, New York “(Executive”).

WITNESSETH:

            WHEREAS, The Board of Directors (the “Board”) of the Employer has
approved the Bank entering into a severance agreement with certain key
executives to encourage the continued dedication of the Executive to the Bank
and to promote the stability of Bank management by providing certain protections
for the Executive in the event a change of control occurs with the bank; and

            WHEREAS, should the Corporation receive any proposal from a third
person concerning any possible business combination with, or acquisition of
equity securities of, the Corporation, the Board believes it imperative that the
Corporation be able to rely upon the Executive to continue in his/her position,
and that the Corporation be able to receive and rely upon his/her advice, if it
requests it, as to the best interests of the Corporation and its shareholders
without concern that he/she might be distracted by the personal uncertainties
and risks created by such a proposal; and

            WHEREAS, should the Corporation receive any such proposals, in
addition to the Executive’s regular duties, he/she may be called upon to assist
in the assessment of such proposals, to advise management and the Board as to
whether such proposals would be in the best interests of the Corporation and its
shareholders, and to take such other actions as the Board might determine to be
appropriate; and

            WHEREAS, the Board also desires to encourage the continued
dedication of the Executive to the Corporation and to the Bank and to promote
the stability of the Bank’s management by providing certain protections for the
Executive in the event that a Change in Control (as hereinafter defined) occurs
with respect to the Corporation:

            NOW, THEREFORE, to assure the Employer will have the continued
dedication of the Executive and the availability of his/her advice and service
notwithstanding the possibility, threat or occurrence of a bid to take over
control of the Corporation, and to induce the Executive to remain in the employ
of the Bank, and for other good and valuable consideration, the Employer and the
Executive agree as follows:

 

1.
Services During Certain Events. In the event a “person” or “group” (as such
quoted terms are defined in Section 4 (a)(i) below) begins a tender or exchange
offer, circulates a proxy to shareholders, or takes other steps seeking to
effect a Change of Control (as defined in Section 4(a) below), the Executive
agrees that he/she will not voluntarily leave the employ of the Bank and will
render the services contemplated in the recitals to this Agreement consistent
with his/her then current employment terms until the such person or group has
abandoned or terminated his/her or its efforts to effect a Change of Control or
until three (3) months after a Change of Control has occurred, but in no event
shall such period exceed six (6) months.
  2. Termination after Change in Control.  

  a.         Change of Control Payment. In the event of a Termination

 
(as defined in Section 4(b) below) of the Executive’s employment with the Bank
in anticipation of, or within twenty-four (24) months after, a Change of
Control, the Bank shall be obligated, subject to the limitation contained in
Section 2(d) below, to pay the Executive an amount equal to the Executive’s
Average Annual Taxable Compensation (as defined in Section 4(e) below). Such
amount shall be payable to the Executive in four (4) equal quarterly
installments (subject to any applicable payroll or other taxes required to be
withheld), over a two (2) year period, without interest, with the first such
payment made not later than thirty (30) days after the Executive’s last day of
employment with the Bank and each succeeding payment being due on the same day
of every third calendar month thereafter. In the event the Executive dies at any
time during the year following his/her Termination, any remaining unpaid
installments provided for by this Section 2(a) shall be paid to his/her estate.
Notwithstanding the foregoing, at the sole election of the Bank, the entire
amount payable to the Executive pursuant to this Section 2(a) may be paid in a
lump sum, not later than the 30(th) day following the Executive’s last day of
employment with the Bank.

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b.          Employee Benefits. In the event a Change of Control occurs  
and the Executive is entitled to the Change of Control Payment set forth in
Section 2(a), Executive shall also be provided with the same level of standard
employee benefits he/she was receiving on the date of Termination, or the cash
equivalent of such benefits, for a period of twenty-four (24) months following
Executive’s termination.
 
c.         Stock Options. In the event a Change of Control occurs and  the
Executive is entitled
        
 to the Change of Control Payment set forth in Section 2(a), all forms
of equity-based compensation previously granted to Executive, including any
stock options or other awards under the Corporation’s Long Term Incentive
Compensation Plan, shall become immediately vested and exercisable. In such
event, the Corporation shall take all necessary and appropriate action to effect
such treatment, and such benefits shall otherwise be governed by the terms of
the plan and related grant document under which such benefit was granted.
 

  d.         Limitation. Notwithstanding anything in this Agreement to the

 
contrary, in the event that the amount payable to the Executive pursuant to
Section 2(a) above, when added to all other amounts paid or to be paid to, and
the value of all property received or to be received by the Executive in
anticipation of or following a Change of Control, whether paid or received
pursuant to this Agreement or otherwise (such other amounts and property being
referred to herein as “Other Change in Control Payments”), would constitute an
excess parachute payment within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (or any successor or renumbered section), then
the amount payable pursuant to Section 2(a) of this Agreement shall be reduced
to the maximum amount which, when added to such Other Change in Control
Payments, does not constitute an excess parachute payment.
 

3.
Employment “at Will” .  Notwithstanding any provisions of this Agreement, this
Agreement shall not confer upon the Executive the right to be retained in the
service of the Bank nor limit the right of the Bank to discharge or otherwise
change the terms of employment, except to the extent expressly provided herein.
It is the express understanding of the parties hereto that the Executive’s
employment shall at all times be “at Will”, notwithstanding any provisions of
this Agreement. Accordingly, the Executive or the Bank may terminate the
Executive’s employment with the Bank at any time or without cause, except as
otherwise provided by law.
  4.         
Definitions.  For purposes of this Agreement, the following terms have the
following respective meanings:
 

  a.         A “Change of Control” shall be deemed to have occurred if either:

   i.
any “person,” including a “group,” as determined in accordance with Section
13(d)(3) of the Securities Exchange Act of 1934 (“Exchange Act”), is or becomes
the beneficial owner, directly or indirectly, of securities of the Corporation
representing 30% or more of the combined voting power of the Corporation’s then
outstanding securities;
     ii. 
as a result of, or in connection with, any tender offer or exchange offer,
merger or other business combination (each a “Transaction”), the persons who
were directors of Employer before the Transaction shall cease to constitute a
majority of the Board of Directors of the Corporation or any successor to the
Corporation;
    iii. 
the Corporation is merged or consolidated with another corporation and, as a
result of the merger or consolidation, less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall then be owned in the
aggregate by the former shareholders of the Corporation, other than (A)
affiliates within the meaning of the Exchange Act, or (B) any party to the
merger or consolidation;
    iv. 
a tender offer or exchange offer is made and consummated for the ownership of
securities of the Corporation representing 30% or more of the combined voting
power of the Corporation’s then outstanding voting securities; or
    v. 
the Corporation transfers all or substantially all of its assets to another
corporation or entity which is not controlled by the Corporation.
   

b.         
“Termination” shall mean (1) termination by the Employer (or successor entity)
of the employment of the Executive for any reason other than death, Disability
(as defined in section 4(d) or Termination for Cause (as defined in Section
4(c), or (2) resignation of the Executive upon the occurrence of the following
events: 
 

i.
A significant change in the nature or scope of the Executive’s authority from
that prior to a Change of Control, (ii) a reduction in the Executive’s total
compensation (including all earned bonuses and

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benefits) from that prior to a Change of Control, or (iii) a change in the
general location where the Executive is required to perform services from that
prior to a Change of Control.
 

  c.         “Termination for Cause” shall mean (i) conduct involving fraud,  

 
misappropriation or intentional material damage to the property or business of
the Employer, or commission of a misdemeanor or felony, (ii) failure or breach
to perform Executive’s designated duties consistent with his/her position after
receiving written notice from the Employer specifying the nature of the alleged
failure or breach and failing to correct the failure or breach within 15 days of
such notice, or (iii) Executive’s intentional violation of the Employer’s
written policies, Executive’s fiduciary duties, or any law or regulation which
results in material damage or cost to the Employer.
 

d.         
“Disability” shall mean the Executive’s absence from his/her duties with the
Employer on a full time basis for six (6) successive months, or for shorter
periods aggregating seven (7) months or more in any year, as a result of the
Executive’s incapacity due to physical or mental illness, unless within thirty
(30) days after the Employer gives written notice of termination following such
absence the Executive shall have returned to the full time performance of
his/her duties.
  e.         
“Average Annual Taxable Compensation”  means the average annual compensation of
the Executive from the Bank over the three (3) most recent taxable years (or
shorter time of Executive’s employment on an annualized basis) preceding the
year in which the Change of Control occurs, which is includable in gross income
for federal income tax purposes, including base salary and bonus compensation,
but excluding any contributions made for the Executive’s benefit to any
qualified pension or profit sharing plan (including a 401(k) plan), amounts
payable to or deferred at the election of the Executive under any other deferred
compensation plan which are not taxable to the Executive prior to the date of
the Executive’s Termination, and any other non-taxable fringe benefits. For
purpose of determining the Executive’s Average Annual Taxable Compensation,
pursuant to Section 2(a) above, compensation paid during less than all of a
taxable year shall be annualized based on the intent that Executive shall be
entitled to the benefits of this Agreement immediately upon the date of this
Agreement.
 

5.
Trade Secrets. It is recognized that the Bank has acquired and developed and
will continue to acquire and develop techniques, plans, processes, computer
programs, and lists of customers and their particular requirements which may
pertain to Bank related services and equipment, and related trade secrets,
know-how, which are proprietary and confidential in nature and are and will
continue to be of unique value to the Bank and it business (all hereinafter
referred to as “Confidential Information”). All Confidential Information known
or in the possession of Executive shall be kept and maintained by him/her as
confidential and proprietary to the bank. The Executive shall not disclose any
Confidential Information at any time directly or indirectly, in any manner to
any person or firm, except to other employees of the bank on a “need to know ”
basis. Upon termination of his/her employment for any reason, the Executive
shall without demand therefore deliver to the bank all Confidential Information
in his/her possession. The obligations of this Section shall survive the
termination of this Agreement indefinitely.
  6.
Successors.  This Agreement shall be binding upon and inure to the benefit of
the Executive and his/her estate, and the Employer and any successors of the
Employer, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by the Executive.
  7.
Entire Agreement. This Agreement represents the entire agreement between the
parties with respect to the subject matter of this agreement and specifically
supersedes any and all oral or written agreements on its subject matter
previously agreed to by the parties.
  8.
Severability.  Any provision in this agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not be invalidated or rendered
unenforceable such provision in any other jurisdiction.
  9.
Controlling Law.  This Agreement shall in all respects be governed by, and
construed in accordance with, the Laws of the State of New York. The Employer
shall be entitled to deduct and withhold from compensation and benefits
hereunder all income and employment taxes and any other similar taxes or sums
required by law to be withheld.
  10.
Term of Agreement: Initial Term and Renewal. The initial term of this Agreement
shall commence as of January 1, 2005 and shall continue through December 31,
2005, unless earlier terminated as provided herein. Thereafter, this Agreement
shall be renewed for additional one year periods, unless either party gives
written notice of non-renewal of this Agreement to the other party at least
thirty (30) days prior to the expiration of the initial term or any renewal
term; provided, however, that in no case shall this Agreement terminate: (i)
within 12 months after the occurrence of a Change of Control, or (ii) during any
period of time when the Employer has knowledge that any person or group (such
terms are defined in Section 4(a)(i) above) has taken steps reasonably
calculated to effect a Change in Control until, in the opinion of the Board,
such person or group has abandoned or terminated his/her or its efforts to
effect a Change of Control. Any

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determination by the board that such person or group has abandoned or terminated
his/her or its efforts to effect a Change of Control shall be conclusive and
binding as the Executive.
 

 
                IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date specified in the first paragraph of this agreement.

  ALLIANCE FINANCIAL CORPORATION       /s/ Jack H. Webb   ———————————————————  
Jack H. Webb, Chairman, President & CEO       /s/ Connie M. Whitton  
———————————————————   Connie M. Whitton      

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