CANANDAIGUA NATIONAL BANK

AND TRUST COMPANY

72 South Main Street

Canandaigua, New York 14424

Robert G. Sheridan

Phone: (716) 394-4260

Executive Vice President and Cashier

Facsimile: (716) 396-1355

Retail Services

                      CNBanker Voice (716) 394-5520

e-mail: rsheridan@cnbank.com

November 20, 2000

Mr. Joseph L. Dugan

235 Parker Drive

Pittsburgh, PA 15216

Re:

Employment and Compensation Agreement

Dear Joe:

Pursuant to our recent conversations this letter shall attempt to confirm our
understandings regarding your anticipated employment with Canandaigua National
Bank and Trust Co.  Our offer includes the following:

1)

Your base pay shall be $110,000 per annum.

2)

We agree to pay you $13,000, net of taxes upon your execution and return of a
copy of this agreement and the processing of your employment application, which
is enclosed.

3)

We shall provide you with 25 shares of the common stock of The Canandaigua
National Corporation upon your execution of this agreement and the processing of
your employment application.

4)

You shall be eligible for a Performance Bonus upon your attainment of certain
goals according to the matrix attached hereto and labeled Exhibit A.

5)

Your title shall be Senior Vice President.  You shall be a member of our
Management Group and shall be entitled to normal bank benefits but also certain
benefits associated with your senior position to include membership in a health
club and annual physical to an extent not to exceed $1,500.  In addition you
shall be eligible for stock options, as a

Mr. Joseph L. Dugan

November 20, 2000

Page 2

Senior Vice President, in connection with the Canandaigua National Corporation
Stock Option Plan based upon performance of the bank.  A copy of the plan is
enclosed for your review.

6)

You shall be eligible for tuition reimbursement for accredited undergraduate or
graduate level courses provided they are approved by the CEO.

7)

You shall be eligible for certain relocation expense reimbursements as outlined
in Exhibit B attached hereto.

8)

The sign-on bonus and relocation expenses outlined above shall be subject to
100% refund should you voluntarily leave the employ of the Canandaigua National
Bank and Trust Company within 24 months of the commencement of your employment
here; and 50% refund should you voluntarily leave within 24 –36 months.

9)

During your tenure your guaranteed severance shall be 6 months of base pay in
the event that you leave the bank involuntarily.

10)

Your employment shall commence on December 29, 2000. Your are employeed at will,
and your employment is subject to the policies and procedures set forth in our
employee handbood that is enclosed with this letter.

I trust that the above terms and conditions of employment meet with your

approval.  If they do, kindly indicate your acknowledgement and acceptance of
them by executing the enclosed copy of this letter and returning it to me.  If
you have any questions or concerns please call me at 716-393-6097 or write to me
at:

72 S. Main St.

Canandaigua, New York 14424

We look forward to you joining the bank and playing an important role toward our
future growth and profitability.

Sincerely yours,

Robert G. Sheridan

Senior Vice President

Mr. Joseph L. Dugan

November 20, 2000

Page 3

I hereby acknowledge and agree to the terms and conditions of employment as
outlined above.  

11/22/2000

/s/ Joseph L. Dugan

Dated

Joseph L. Dugan

Mr. Joseph L. Dugan

November 20, 2000

Page 4

Exhibit A – Sales Manager Bonus Program

 

 

 

 

 

 

 

 

 

 

 

Relationship Ratio

 

 

 

< 1:1.5

1:1.5 - 1:1.99

1:2 - 1:3.99

1:4-1:4.99

1:5+

 

Number of Qualifying DDA's

 <400

0.0%

2.5%

5%

10%

15%

 

 401-799

2.5%

5%

10%

15%

20%

 

 800-1,199

5.0%

10%

15%

20%

25%

 

 1,200-1,599

7.5%

15%

20%

25%

30%

 

 1,600-1,999

10.0%

20%

25%

30%

40%

 

 2,000+

12.5%

25%

30%

40%

65%

Mr. Joseph L. Dugan

November 20, 2000

Page 5

Exhibit A – Sales Manager Bonus Program (continued)

 

Qualifying DDA

 

 

Checking Account

 

 

and Direct Deposit of Payroll

 

and Debit Card

 

 

Must also offer

 

 

Chexmate Line of Credit

 

Credit Card

 

 

 

 

 

 

Relationship Ratio

 

 

Calculated as the ratio of # of cross sold products to the checking account

 

E.g. Customer has checking account and opens 1 savings account, 1 time deposit

 

  and a consumer loan.  Total products are 4 (includes checking).  Therefore
ratio is

 

  1:4.  Direct Debit and CNBill Pay are 1/2 point each

 

 

 

 

 

Ratio is calculated using the period 180 days following the opening date of the
checking account.

 

 

 

 

 

Qualifying accounts:

 

 

Value

Type

 

 

            0.5

At least one direct debit to non-CNB vendor

 

            0.5

CNBill pay enabled account

 

            1.0

Any savings product, including money market

 

            1.0

Any time account

 

            1.0

Any direct consumer loan, except chexmate

 

            1.0

Any mortgage loan, including home equity

 

 

Any insurance policy:

 

            1.0

Property and casualty

 

            1.0

Life

 

 

            1.0

Long-tem Care

 

            1.0

Any Trust account, including retirement account

 

            1.0

Any Investment account, including mutual fund

Mr. Joseph L. Dugan

November 20, 2000

Page 6

Exhibit B – Benefits

 

 

Joe Dugan

 

 

 

 

 

 

 

 

Salary and Benefits Summary Proposal

 

 

 

 

 

 

 

 

The Canandaigua National Bank and Trust Company

 

 

 

 

 

 

Position Title 

Vice President - Sales 

 

 

 

 

 

 

Amount

Estimated Value 

 

Salary and related compensation 

 

 

 

Salary (Review 12/01)  Annual Base Rate for 2001 

$100,000.00 

$100,000.00 

 

Bonus  - variable up to 35% of base 

 

 

 

     payable February 28 following year 

0%-35%

$ 35,000.00 

 

CNB Profit Sharing Plan - Contractual - Est 12% Base 

12%

$12,000.00 

 

CNB E.S.O.P. - Contractual - Est 1% Base 

1%

$1,000.00 

 

 

 

 

 

Signing Bonus (Net after taxes) * 

 

 

 

     Net after taxes (check enclosed)

$5,000.00 

$ 6,250.00 

assume 25% tax rate

 

 

 

 

Vacation

 

 

 

Year 2001 

4 weeks 

$ 7,692.31 

 

 

 

 

 

Holidays 

 

 

 

     Follow federal banking holidays 

9-10 per year 

$          3,846.15 

 

 

 

 

 

Group Benefit Plans 

 

 

 

     Health insurance 

50% subsidy 

$          3,105.60 

Family Group Plan

     Pre-tax spending accounts 

 

 

 

     -Unreimbursed Medical Care Expenses 

up to $3,500

$             875.00 

est tax save at 25% rate

     -Unreimbursed Medical and Child Care Expenses 

up to $5,000 

$          1,250.00 

est tax save at 25% rate

     Pre-tax dental plan 

family plan 

$             164.34 

est tax save at 25% rate

     Life Insurance 

3x Base Salary 

$             276.00 

Est annual premium

     Short Term Disability 

50%-100% salary 

$             250.00 

Est annual premium

     Long Term Disability 

60% salary 

$             250.00 

Est annual premium

 

 

 

 

Preferred Lending Rate - 7.25%

 

 

 

     Short term lending - Up to $15,000 

 

$             300.00 

Current rate 9.25%

     Mortgage Loans - Up to $30,000 

 

$             114.00 

Current rate 8.01%

 

 

 

 

Relocation Expenses * 

 

 

 

    Reimbursement for up to $7,500 of associated expenses 

 $           7,500.00 

$          9,375.00 

Non-taxable reimbursement

 

 

 

 

 

 

 

 

 

Total Estimated Value 

$181,748.40

 

The Signing Bonus and Relocation Expense Reimbursement  are 100% refundable to
the Bank if you leave employment, without cause within 36 months of your start
date