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< 1:1.51:1.5 - 1:1.991:2 - 1:3.991:4-1:4.991:5+Number of Qualifying DDA's<4000.0%2.5%5%10%15%401-7992.5%5%10%15%20%800-1,1995.0%10%15%20%25%1,200-1,5997.5%15%20%25%30%1,600-1,99910.0%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 DDAChecking Accountand Direct Deposit of Payrolland Debit CardMust also offerChexmate Line of CreditCredit CardRelationship RatioCalculated as the ratio of # of cross sold products to the checking accountE.g. Customer has checking account and opens 1 savings account, 1 time depositand a consumer loan.  Total products are 4 (includes checking).  Therefore ratio is1:4.  Direct Debit and CNBill Pay are 1/2 point eachRatio is calculated using the period 180 days following the opening date of the checking account.Qualifying accounts:ValueType0.5At least one direct debit to non-CNB vendor0.5CNBill pay enabled account1.0Any savings product, including money market1.0Any time account1.0Any direct consumer loan, except chexmate1.0Any mortgage loan, including home equityAny insurance policy:1.0Property and casualty1.0Life1.0Long-tem Care1.0Any Trust account, including retirement account1.0Any Investment account, including mutual fund   Mr. Joseph L. Dugan November 20, 2000 Page 6   Exhibit B  Benefits Joe DuganSalary and Benefits Summary ProposalThe Canandaigua National Bank and Trust Company  Position TitleVice President - Sales  AmountEstimated ValueSalary and related compensationSalary (Review 12/01)  Annual Base Rate for 2001$100,000.00$100,000.00Bonus  - variable up to 35% of basepayable February 28 following year0%-35%$ 35,000.00CNB Profit Sharing Plan - Contractual - Est 12% Base12%$12,000.00CNB E.S.O.P. - Contractual - Est 1% Base1%$1,000.00Signing Bonus (Net after taxes) *Net after taxes (check enclosed)$5,000.00$ 6,250.00assume 25% tax rateVacationYear 20014 weeks$ 7,692.31HolidaysFollow federal banking holidays9-10 per year$          3,846.15Group Benefit PlansHealth insurance50% subsidy$          3,105.60Family Group PlanPre-tax spending accounts-Unreimbursed Medical Care Expensesup to $3,500$             875.00est tax save at 25% rate-Unreimbursed Medical and Child Care Expensesup to $5,000$          1,250.00est tax save at 25% ratePre-tax dental planfamily plan$             164.34est tax save at 25% rateLife Insurance3x Base Salary$             276.00Est annual premiumShort Term Disability50%-100% salary$             250.00Est annual premiumLong Term Disability60% salary$             250.00Est annual premiumPreferred Lending Rate - 7.25%Short term lending - Up to $15,000$             300.00Current rate 9.25%Mortgage Loans - Up to $30,000$             114.00Current rate 8.01%Relocation Expenses *Reimbursement for up to $7,500 of associated expenses$           7,500.00$          9,375.00Non-taxable reimbursementTotal 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