Exhibit 10.3


 


NON-QUALIFIED STOCK OPTION AWARD AGREEMENT


 


 


 


Stock
Option


 


Granted by


 


CHEMUNG
FINANCIAL CORPORATION


 


under the


 


CHEMUNG FINANCIAL CORPORATION


2021 EQUITY INCENTIVE
PLAN


 


This stock option agreement
(“Option” or “Agreement”) is and will be subject in every respect to the provisions of the
2021 Equity Incentive Plan (the “Plan”) of Chemung Financial Corporation (the “Company”)
which are incorporated herein by reference and made a part hereof, subject to the provisions of this Agreement. A copy of the Plan
has been provided, or made available, to each person granted a stock option pursuant to the Plan. The holder of this Option (the
“Participant”) hereby accepts this Option, subject to all the terms and provisions of the Plan and this Agreement,
and agrees that all decisions under and interpretations of the Plan and this Agreement by the Compensation Committee of the Board
of Directors of the Company (“Committee”) will be final, binding and conclusive upon the Participant and the
Participant’s heirs, legal representatives, successors and permitted assigns. Except where the context otherwise requires,
the term “Company” will include the parent and all present and future subsidiaries of the Company as defined in Section
424(e) and 424(f) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”). Capitalized
terms used herein but not defined will have the same meaning as in the Plan.


 


		1.	Name of Participant. ______________________________________________________


 

		2.	Date of Grant. _________, 20__


 

		3.	Total number of shares of Company common stock, $0.01 par value per share, that may be
                                                                                                         acquired pursuant to this Option. ___________________________________________
		 	(subject to adjustment pursuant to Section 10 hereof).


 

		·	This is a Non-Qualified Option.



 


		4.	Exercise price per share. $ _______
		 	(subject to adjustment
pursuant to Section 10 below)






 


		5.	Expiration Date of Option. ________, 20__



 


		6.	Vesting Schedule. Except as otherwise provided in this Agreement, this Option first becomes
exercisable, subject to the Option’s expiration date, in accordance with the vesting schedule specified herein.



 






     


     


    




The Options granted under this
Agreement shall vest in ___ (__) equal annual installments, with the first installment becoming exercisable on the first anniversary
of the date of grant, or _______, 20__, and succeeding installments on each anniversary thereafter, through ________, 20__. To
the extent the Options awarded to me are not equally divisible by “__,” any excess Options shall vest on ________,
20__.


 


This Option
may not be exercised at any time on or after the Option’s expiration date. Unless otherwise provided by action of the Committee
in accordance with the Plan, this Option will vest pursuant to Section 2.8 of the Plan in the event of death, Disability and pursuant
to Section 4.1 of the Plan in the event of Involuntary Termination following a Change in Control.


 


		7.	Exercise Procedure.



 


		7.1	Delivery of Notice of Exercise of Option. This Option will be exercised in whole or in part
by the Participant’s delivery to the Company of written notice (the “Notice of Exercise of Option” attached
hereto as Exhibit A) setting forth the number of shares with respect to which this Option is to be exercised, together with payment
by cash or other means acceptable to the Committee, including:



 


		·	Cash or personal, certified or cashier’s check in full/partial payment of the purchase price.



 


		·	Stock of the Company in full/partial payment of the purchase price.



 


		·	By a net settlement of the Option, using a portion of the shares obtained on exercise in payment
of the exercise price of the Option (and, if applicable, any required tax withholding).


 

		·	By selling shares from my Option shares through a broker in full/partial payment of the purchase
price.


 

		7.2	“Fair Market Value” shall have the meaning set forth in Section 8.1(r) of the
Plan.



 


		8.	Delivery of Shares.



 


		8.1	Delivery of Shares. Delivery of shares of Common Stock upon the exercise of this Option
will comply with all applicable laws (including the requirements of the Securities Act) and the applicable requirements of any
securities exchange or similar entity.



 


		9.	Change in Control.



 


		9.1	In the event of the Participant’s Involuntary Termination at or following a Change in Control,
all Options held by the Participant, whether or not exercisable at such time, will become fully exercisable, subject to the expiration
provisions otherwise applicable to the Option.



 


		9.2	A “Change in Control” will be deemed to have occurred as provided in Section
4.2 of the Plan.



 



     


     


    




		10.	Adjustment Provisions.



 


This
Option, including the number of shares subject to the Option and the exercise price, will be adjusted upon the occurrence of the
events specified in, and in accordance with the provisions of Section 3.4 of the Plan.


 


		11.	Termination of Option and Accelerated Vesting.



 


This Option
will terminate upon the expiration date, except as set forth in the following provisions:


 


		(i)	Death. In the event of the Participant’s Termination of Service by reason of the Participant’s
death, all Stock Options shall be exercisable as to all shares subject to this Option whether or not then exercisable at the date
of Participant’s Termination of Service by reason of death. This Option may thereafter be exercised by the Participant’s
legal representative or beneficiaries for a period of one (1) year from the date of death, subject to termination on the expiration
date of this Option, if earlier.


 

		(ii)	Disability. In the event of the Participant’s Termination of Service by reason of
Disability, all Stock Options shall be exercisable as to all shares subject to this Option whether or not then exercisable at the
date of Participant’s Termination of Service by reason of Disability. This Option may thereafter be exercised for a period
of one (1) year from the date of such Termination of Service by reason of Disability, subject to termination on the Option’s
expiration date, if earlier.


 

		(iii)	Retirement. Unless otherwise determined by the Committee, in the event of the Participant’s
Termination of Service by reason of the Participant’s Retirement, vested Options shall be exercisable for one (1) year following
Termination of Service subject to termination on the Option’s expiration date, if earlier, and any Option that has not vested
as of the date of Termination of Service shall expire and be forfeited. “Retirement” shall have the meaning set forth
in Section 8.1(ee) of the Plan.



 


		(iv)	Termination for Cause.  If the Participant’s Service has been terminated for Cause,
all Options that have not been exercised will expire and be forfeited.



 


		(v)	Other Termination. If the Participant’s Service terminates for any reason other than
due to death, Disability, Retirement, Involuntary Termination following a Change in Control or for Cause, this Option may thereafter
be exercised, to the extent it was exercisable at the time of such termination, for a period of three (3) months following termination,
subject to termination on the Option’s expiration date, if earlier.



 



     


     


    




		12.	Miscellaneous.



 


		12.1	No Option will confer upon the Participant any rights as a stockholder of the Company prior to
the date on which the individual fulfills all conditions for receipt of such rights.



 


		12.2	This Agreement may not be amended or otherwise modified unless evidenced in writing and signed
by the Company and the Participant.



 


		12.3	In the discretion of the Committee, a non-qualified Option granted under the Plan may be transferable
by the Participant, provided, however, that such transfers will be limited to Immediate Family Members of Participants, trusts
and partnerships established for the primary benefit of such family members or to charitable organizations, and provided, further,
that such transfers are not made for consideration to the Participant.



 


		12.4	This Agreement will be governed by and construed in accordance with the laws of the State of New
York.



 


		12.5	This Agreement is subject to all laws, regulations and orders of any governmental authority which
may be applicable thereto and, notwithstanding any of the provisions hereof, the Participant agrees that he or she will not exercise
the Option granted hereby nor will the Company be obligated to issue any shares of stock hereunder if the exercise thereof or the
issuance of such shares, as the case may be, would constitute a violation by the Participant or the Company of any such law, regulation
or order or any provision thereof.



 


		12.6	The granting of this Option does not confer upon the Participant any right to be retained
in the service of the Company or any subsidiary.



 


[Signature Page to Follow]


 


 


 


 


 



     


     


    




IN WITNESS WHEREOF,
the Company has caused this Agreement to be executed in its name and on its behalf as of the date of grant of this Option set forth
above.


 


 

	 	CHEMUNG FINANCIAL CORPORATION
	 	 
	 	 
	 	By:	 
	 	Its:	 


 


 


 


PARTICIPANT’S ACCEPTANCE


 


The undersigned hereby
accepts the foregoing Option and agrees to the terms and conditions hereof, including the terms and provisions of the 2021 Equity
Incentive Plan. The undersigned hereby acknowledges receipt of a copy of the Company’s 2021 Equity Incentive Plan.


 


 


	 	PARTICIPANT
	 	 
	 	 
	 	 



 


 






     


     


    

EXHIBIT A


NOTICE OF EXERCISE OF OPTION


 


I hereby exercise the
stock option (the “Option”) granted to me by Chemung Financial Corporation (the “Company”) or its affiliate,
subject to all the terms and provisions set forth in the Stock Option Agreement (the “Agreement”) and the Chemung Financial
Corporation 2021 Equity Incentive Plan (the “Plan”) referred to therein, and notify you of my desire to purchase __________________
shares of common stock of the Company (“Common Stock”) for a purchase price of $______ per share.


 


I elect to pay the
exercise price by:


 


		___	Cash or personal, certified or cashier’s check in the sum of $_______, in full/partial payment
of the purchase price.


 

		___	Stock of the Company with a fair market value of $______ in full/partial payment of the purchase
price.*


 

		___	A net settlement of the Option, using a portion of the shares obtained on exercise in payment of
the exercise price of the Option (and, if applicable, any required tax withholding).


 

		___	Selling ______ shares from my Option shares through a broker in full/partial payment of the purchase
price.



 


I understand that after
this exercise, ____________ shares of Common Stock remain subject to the Option, subject to all terms and provisions set forth
in the Agreement and the Plan.


 


I hereby represent
that it is my intention to acquire these shares for the following purpose:


 


___investment


___resale or distribution


 


Please note: if your
intention is to resell (or distribute within the meaning of Section 2(11) of the Securities Act of 1933) the shares you acquire
through this Option exercise, the Company or transfer agent may require an opinion of counsel that such resale or distribution
would not violate the Securities Act of 1933 prior to your exercise of such Option.


 

	Date: ____________, _____.	 	 
	 	 	Participant’s signature




 


*       If
I elect to exercise by exchanging shares I already own, I will constructively return shares that I already own to purchase
the new option shares. If my shares are in certificate form, I must attach a separate statement indicating the certificate number
of the shares I am treating as having exchanged. If the shares are held in “street name” by a registered broker, I
must provide the Company with a notarized statement attesting to the number of shares owned that will be treated as having been
exchanged. I will keep the shares that I already own and treat them as if they are shares acquired by the option exercise. In addition,
I will receive additional shares equal to the difference between the shares I constructively exchange and the total new option
shares that I acquire.