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

 

CHANGE OF CONTROL AGREEMENT

THIS CHANGE OF CONTROL AGREEMENT (“Agreement”) is hereby entered
into on this 16th day of May, 2012, by and between CHEMUNG CANAL TRUST
COMPANY, a trust company chartered under the laws of the State of New York with
its
principal office located at One Chemung Canal Plaza, Elmira, New York 14902
(“Bank”),
and Mark A. Severson, of 2554 Mountain Lake Road, Asheboro, NC  27205
(“Executive”).

WHEREAS, Executive serves as the Executive Vice President and Chief Financial
Officer; and

WHEREAS, the Bank desires to set forth the severance benefits Executive would
receive in the event of a termination of Executive’s employment with the Bank
following
the occurrence of a Change of Control;

NOW THEREFORE, to ensure Executive’s continued dedication to the Bank and
to induce Executive to remain and continue in the employ of the Bank, and for
other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the
parties hereby agree as follows:

1.  CHANGE OF CONTROL.  This Agreement shall become operative only if and
when there has occurred a “Change of Control” of the Bank.  A “Change of
Control” shall
mean (1) any merger, consolidation or other corporate reorganization in which
the Bank is
not the surviving corporation, (2) the event that any “person” (as that term is
used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
beneficial owner, directly or indirectly, of securities of the Bank representing
thirty percent
(30%) or more of the combined voting power of the Bank’s then outstanding
securities,
provided that the acquisition of additional securities or voting power by a
person who, as
of the date of this Agreement, already is the direct or indirect beneficial
owner of twenty
percent (20%) of such combined voting power, shall not constitute a Change of
Control, or
(3) the event in which a majority of the members of the Bank’s Board of
Directors is
replaced during any twenty-four (24) month period by Directors whose appointment
or
election is not endorsed by two-thirds (2/3) of the members of the Bank’s Board
of
Directors prior to the date of appointment or election.

2.  TERMINATION.

(a)           If, after the occurrence of a Change of Control, Executive’s
employment is
terminated by the Bank without Cause within the twelve (12) month period
immediately
following the effective date of the Change of Control or if the Executive
terminates his or
her employment with the Bank for any reason, within such period, the Bank shall
pay to
Executive, in addition to any other compensation, remuneration, or benefits due
to
Executive under any other plan, contract, or arrangement with the Bank, the
Severance Pay
described in Section 3 of this Agreement in equal monthly installments for the
twenty-four
(24) months immediately following the effective date of the termination of
Executive’s
employment, with the first such installment to be paid on the first day of the
first month
 
Page 1 of 5

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

 
immediately following the month in which Executive’s employment is terminated.

(b)           For the purposes of this section, the Bank shall have “Cause” to
terminate
Executive’s employment if Executive engages in personal dishonesty, willful
misconduct,
breach of fiduciary duty, willful violation of any law, rule, or regulation
(other than traffic
violations or similar offenses), gross insubordination, or gross
negligence.  For the
purposes of this paragraph, no act or failure to act shall be considered
“willful” unless done
or omitted to be done, by the Executive not in good faith and without a
reasonable belief
that Executive’s action or omission is in the best interests of the Bank.  In no
event shall
Executive be deemed to have been terminated for Cause unless and until there
shall have
been delivered to Executive a copy of a certification by a majority of the
non-officer
members of the Board of Directors finding that the Executive was guilty of
conduct
deemed to be Cause within the meaning of this paragraph.

3.  SEVERANCE PAY.  Except as provided in Section 4 of this Agreement,
Severance Pay payable to the Executive pursuant to this Agreement shall mean two
(2.0)
times the highest annual compensation (including only salary and bonuses) paid
by the
Bank to Executive for any of the two (2) calendar years ending with the year in
which
Executive’s employment is terminated.  Severance Pay shall be reduced by all
amounts
that are required to be withheld or deducted under federal, state or municipal
law.

4.  LIMITATIONS ON SEVERANCE PAY.

(a)           Notwithstanding any other provision of this Agreement, in no event
shall
the Bank be required to pay to Executive any amount under this Agreement which
would,
 in the opinion of counsel to the Bank, constitute an “excess parachute payment”
as that
term is defined by Section 280G and/or Section 4999 of the Code.  The Bank shall
not be
required to make any payment under this Agreement if, in the opinion of counsel
to the
Bank, such payment or the amount thereof would violate any applicable Federal,
state or
local law or regulation.

(b)            In the event that the Bank is notified of any determination by
counsel to the
Bank that the Bank’s payment of any amount under this Agreement would violate
paragraph 4(a), the Bank shall provide Executive written notice of such
determination
within five (5) business days of the date of such determination, which notice
shall indicate
the amount by which any payment will be reduced as a result of such
determination.

(c)           All payments of Severance Pay pursuant to this Agreement shall be
reduced
by the Bank as may be necessary to avoid violation of this Section 4.  In the
event that any
government or other authority of competent jurisdiction determines that any
amount
received by Executive pursuant to this Agreement constitutes an “excess
parachute
payment,” or unreasonable compensation for the services performed or to be
performed by
Executive for the Bank, Executive agrees to immediately repay to the Bank the
amount
determined to be an “excess parachute payment” or unreasonable compensation.  In
the
event that any such authority determines that any aspect of the transactions
between
Executive and the Bank pursuant to this Agreement violates any federal, state or
local law
 
2 of 5

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

 
or regulation, the parties hereto agree to cooperate to take all steps necessary
to cure such
violation.

5.  REGULATORY LIMITS.  The provisions of this Section 5 shall control as to
continuing rights and obligations under this agreement notwithstanding any other
provision
of this Agreement, for so long as the Bank shall be regulated by the Board of
Governors of
the Federal Reserve System, the Federal Deposit Insurance Corporation, the New
York
State Banking Department or any other federal or state banking agency (each a
“Regulator”).

(a)           All obligations under this Agreement shall be terminated, except
to the
extent determined by any Regulator that continuation thereof is necessary for
the continued
operation of the Bank at the time the Regulator enters into an agreement to
provide
assistance to or on behalf of the Bank, or approves a supervisory merger to
resolve
problems related to the operation of the Bank, or when the Bank is determined by
a
Regulator to be in an unsafe or unsound condition, notwithstanding the vesting
of any
rights of the parties.

(b)           All obligations under this Agreement shall be subject to and
conditioned
upon the Bank’s satisfaction of and compliance with all state and federal laws,
rules, and
regulations applicable to the Bank, notwithstanding the vesting of any rights
hereunder.  
The Bank shall be relieved of all obligations under this Agreement to the extent
that
performance or satisfaction of such obligations would violate or be inconsistent
with any
federal or state law, rule, or regulation (including, without limitation, safety
and soundness
standards and related regulatory guidance), any order, directive or notice from
a Regulator,
or any formal or informal agreement, safety and soundness compliance plan, or
other
agreement or plan entered into by and between the Bank and any
Regulator.  Whether
the obligations of this Agreement are inconsistent with any law, rule,
regulation, order,
directive, notice, agreement, or plan just described shall be deemed determined
if so found
by any Regulator or by an opinion of the Bank’s counsel, a copy or written
summary of
which finding or opinion of counsel shall be provided by the Bank to Executive
within five
(5) business days of the Bank’s notice of such a determination.

(c)           The payment, accrual and/or vesting of any Severance Pay shall be
suspended in the event the Bank receives any notice from any Regulator
indicating an
intent to issue an order or directive requiring the Bank to take prompt
corrective action or
to take or refrain from taking any other action.

(d)           In the event that any Regulator terminates or requires the Bank by
order or
directive to terminate Executive, Bank shall be relieved of all obligations
under this
Agreement and this Agreement shall be terminated and shall have no further force
and
effect.

(e)           In the event that the Bank is relieved of any or all of its
obligations under
this Agreement as a result of the application of this Section 5 or that any or
all of such
obligations is suspended, the Bank shall provide, within five (5) business days
of the
Bank’s notice of relief or suspension, written notice to Executive describing
the extent to
which the Bank has been relieved of its obligations under this Agreement or to
which such
obligations have been suspended and the reason(s) therefor.
 
3 of 5

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

 

6.  SUCCESSORS.  This Agreement shall inure to the benefit of and be
enforceable by Executive’s personal representatives and heirs.  In the event
that Executive
dies while any amounts remain payable to Executive hereunder, all such amounts
shall be
paid in accordance with the terms of this Agreement to designee(s) or, if there
is no such
designee, to Executive’s estate.

7.  SEVERABILITY.  In the event that any court or other authority of competent
jurisdiction determines that any provision of this Agreement is invalid, illegal
or
unenforceable, such invalidity, illegality or unenforceability shall be limited
to such
provision and shall not affect the validity, legality, or enforceability of any
other provision.  
Any provision in this Agreement which is invalid, illegal or unenforceable in
any
jurisdiction shall, as to such jurisdiction, be invalid, illegal or
unenforceable, only to the
extent required by such jurisdiction and without rendering such provision
invalid, illegal,
or unenforceable in any other jurisdiction.

8.  NO RIGHT TO CONTINUE EMPLOYMENT.  This Agreement shall not give
Executive any right to remain in the employ of the Bank. Subject to the
severance
provisions in this Agreement or in any other written agreement between the Bank
and
Executive, the Bank reserves the right to terminate Executive’s employment at
any time.

9.  AMENDMENT; WAIVER.  No provision of this Agreement may be modified
or waived except by a written instrument executed by Executive and on behalf of
the Bank
by an authorized representative, which instrument specifically refers to this
Section 9.  No
waiver of compliance with any condition or provision of this Agreement shall be
deemed
or constitute a waiver of any other provision or condition of this Agreement and
shall not
operate to preclude or limit any future waivers or modifications of the
Agreement.

10.  NOTICES.  For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing ands shall be
deemed to
have been duly given when delivered or mailed by United States first-class
registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

 
If to Executive:                                  Mark A. Severson
   2554 Mountain Lake Road
        Asheboro, NC  27205

    If to the Bank                                        Chemung Canal Trust
Company
                                                                    One Chemung
Canal Plaza
                                                                P.O. Box 1522
                                                                Elmira, New York
14902-1522

or at such other address as any party may furnish to the other in
writing.  Notices of change
 
4 of 5

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

 
of address shall be effective only upon receipt.

11.  ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement
between the parties and supersedes all current and prior agreements and
understandings,
whether written or oral, between the parties, with respect to the subject matter
hereof.

12.  GOVERNING LAW.  This Agreement shall be interpreted and construed in
accordance with the laws of the State of New York, without regard to any
conflicts of law
rules or principles.

13.  JURISDICTION; VENUE; WAIVER OF JURY TRIAL.  The Bank and
Executive agree that any action or proceeding seeking to enforce any provision
of, or based
on any claim arising out of, or otherwise relating to this Agreement shall be
brought in the
courts of the State of New York, or, if it has or can acquire jurisdiction, in
the United
States District Court for the Western District of new York.  The Bank and
Executive each
give their consent to the jurisdiction of these courts in any such action or
proceeding and
hereby waive any object to venue being laid in such courts.  The Bank and
Executive
further agree to waive their respective rights to a trial by jury in any such
action or
proceeding.

14.  SECTION HEADINGS.  All Section headings herein are included for the
purposes of convenience only and shall not be deemed to have any effect on the
construction or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the parties hereto have hereby executed this Agreement
as of the date set forth above.

CHEMUNG CANAL TRUST COMPANY,

By: /s/Ronald M. Bentley

Its: President & CEO

EXECUTIVE

/s/Mark A. Severson

 
5 of 5 

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