Document:

EXHIBIT 10

	
Exhibit 10.1 CANANDAIGUA NATIONAL CORPORATION STOCK OPTION PLAN

	 
	 
	
CANANDAIGUA NATIONAL CORPORATION

	
STOCK OPTION PLAN

	 
	
1.BACKGROUND AND PURPOSE

	 
	
Canandaigua National Corporation (the "Company") hereby establishes the  Canandaigua National Corporation Stock Option Plan (the "Plan").  The purpose  of this Plan is to enable the Company to retain executive officers and other key employees and provide them with an incentive to maintain and enhance the  Company's long-term performance.  The Company believes that this purpose will  be enhanced by granting eligible employees non-qualified stock options ("NSOs") and incentive stock options ("ISOs") under this Plan pursuant to the  rules set forth in the Internal Revenue Code of 1986, as amended (the "Code").

	 
	
2.ADMINISTRATION

	 
	
The Plan shall be administered by a Committee of the Company's Board of Directors (the "Compensation Committee").  This Committee shall consist of at least two members of the Company's Board of Directors with such qualifications as the Board of Directors deems necessary and desirable from time to time, taking into consideration applicable provisions of the federal securities laws (including Rule 16b-3 promulgated under the Securities and Exchange Act of 1934) and the Code.  The Committee shall possess the authority, in its discretion, (a) to determine the employees of the Company to whom, and the time or times at which, NQSOs and/or ISOs (collectively, "options") shall be granted; (b) to determine at the time of grant whether an option will be an ISO or a NQSO and the number of shares to be subject to each option and the price at which such option will be exerciseable; (c) to prescribe the form of the option agreements and any appropriate terms and conditions applicable to the options and to make any amendments to such agreements or options; (d) to interpret the Plan and the options agreements; (e) to make and amend rules and regulations relating to the Plan; (f) to make all other determinations necessary or advisable for the administration of the Plan; and (g) to amend or modify the Plan except as otherwise provided in Section 13..  The Committee's determinations shall be conclusive and binding.  No member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any option granted hereunder.

	 
	
3.ELIGIBLE EMPLOYEES

	 
	
Options may be granted under the Plan only to employees of the Company and its subsidiaries (which shall include all corporations of which at least fifty percent of the voting stock is owned by the Company directly or through one or more corporations at least fifty percent of the voting stock of which is so owned) who have the capability of making a substantial contribution to the success of the Company.  Employees may be granted any type of award offered under the Plan.

	 
	
4.SHARES AVAILABLE

	 
	
The total number of shares of the Company's Common Stock (par value of $50.00 per share) available in the aggregate for options under this Plan is 16,000.  Shares to be granted may be authorized and unissued shares or may be treasury shares.  

	 
	
If an option expires, terminates or is canceled without being exercised or becoming vested, new options may thereafter be granted under the Plan covering such shares unless otherwise required under applicable laws, rules or regulations.  No option may be granted more than 10 years after the effective date of the Plan.

	 
	
5.TERMS AND CONDITIONS FOR NQSOS

	 
	
Each NQSO granted under the Plan shall be evidenced by a NQSO option agreement in such form as the Committee shall approve from time to time, which agreement shall conform to this Plan and contain such terms and conditions as the Committee may prescribe, including, without limitation, the exercise price of the option, which shall be at, below or above the fair market or book value of the Common Stock on the date of grant as the Committee shall determine and the duration, transferability, vesting and such other terms and conditions the Committee deems appropriate at the time of grant. 

	 
	
6.TERMS AND CONDITIONS OF ISOS

	 
	
Each ISO granted under the Plan shall be evidenced by an ISO option agreement in such form as the Committee shall approve from time to time, which agreement shall conform with this Plan and contain the following terms and conditions:

	 
	
(a)Exercise Price.  The exercise price under each option shall equal the fair market value of the Common Stock at the time such option is granted.  If an option is granted to an officer or employee who at the time of grant owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company (a "10-percent Shareholder"), the purchase price shall be at least 110 percent of the fair market value of the stock subject to the option. To the extent an option initially designated as an ISO exceeds the value limit of Section 6(e), it shall be deemed a NQSO and shall otherwise remain in full force and effect.

	 
	
(b)Duration of Option.  Each option by its terms  shall not be exercisable after the expiration of ten years from the date such option is granted.  In the case of an option granted to a 10-percent Shareholder, the option by its terms shall not be exercisable after the expiration of five years from the date such option is granted.

	 
	
(c)Options Nontransferable.  Each option by its terms shall not be transferable by the participant otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order, or (iii) to the extent permitted under the option agreement or interpretation of the Committee and under Rule 16b-3, by gift to family members or entities beneficially owned by family members or other permitted transferees under Rule 16b-3, and shall be exercisable, during the participant's lifetime, only by the participant, the participant's guardian or the participant's legal representative, the participant's transferee under a qualified domestic relations order or other permitted transferee under this section.  To the extent required for the option grant and/or exercise to be exempt under Rule 16b-3, options (or the shares of Common Stock underlying the options) must be held by the participant for at least six months following the date on which the option was granted (the "Date of Grant").

	 
	
(d)Exercise Terms.  Each option granted under the Plan shall vest over a ten-year period beginning on the Date of Grant, with 50% of the shares vesting on the fifth anniversary of the Date of Grant and 10% of the shares vesting on each annual anniversary of the Date of Grant in years six through ten or such other vesting terms as the Committee shall determine as of the Date of Grant.  Options may be partially exercised from time to time during the period extending from the time they first become exercisable until the tenth anniversary (fifth anniversary for a 10-percent Shareholder) of the Date of Grant.

	 
	
(e)Maximum Value of ISO Shares.  No ISO shall be granted to an employee under this Plan or any other ISO plan of the Company or its subsidiaries to purchase shares as to which the aggregate fair market value (determined as of the Date of Grant) of the Common Stock which first become exercisable by the employee in any calendar year exceeds $100,000.  To the extent an option initially designated as an ISO exceeds the value limit of this Section 6(e), it shall be deemed a NQSO and shall otherwise remain in full force and effect.

	 
	
(f)Payment of Exercise Price.  An option shall be exercised upon written notice to the Company accompanied by payment in full for the shares being acquired.  The payment shall be made in cash or by check or by delivery of previously owned shares. Any such shares so delivered shall be deemed to have a value per share equal to the fair market value of the shares on such date.  For this purpose, fair market value shall equal the closing price of the last sale of Common Stock by the Company.

	 
	
7.GENERAL RESTRICTION ON ISSUANCE OF STOCK CERTIFICATES

	 
	
The Company shall not be required to deliver any certificate upon the grant, vesting or exercise of any option until it has been furnished with such opinion, representation or other document as it may reasonably deem necessary to ensure compliance with any law or regulation of the Securities and Exchange Commission or any other governmental authority having jurisdiction under this Plan.  Certificates delivered upon such grant, vesting or exercise may bear a legend restricting transfer absent such compliance.  Each option shall be subject to the requirement that, if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to such option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such options or the issue or purchase of shares thereunder, such options may not vest or be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee in the exercise of its reasonable judgment.

	 
	 
	 
	
8.IMPACT OF TERMINATION OF EMPLOYMENT

	 
	
(a)  Options

	 
	
If the employment of a participant terminates by reason of death or disability (as determined by the Committee), any option may be exercised by the participant or, in the event of the participant's death, by the participant's personal representative any time prior to the earlier of the expiration date of the option or the expiration of one year after the date of termination, but only if, and to the extent that, the participant was entitled to exercise the option at the date of such termination.  Upon termination of the participant's employment for any reason other than death or disability, any vested option that was exercisable immediately preceding termination may be exercised at any time prior to the earlier of the expiration date of the option or the expiration of three months after the date of such termination for ISOs and six months after the date of termination of employment for NQSOs.  In the event of retirement, the period specified in the preceding sentence shall be extended to one year in the case of NQSOs.  Furthermore, upon retirement of a participant, the Committee has the discretionary authority to accelerate vesting of options under the Plan.  Notwithstanding the foregoing, an option may not be exercised after termination of employment if the Committee reasonably determines that the termination of employment of such participant resulted from willful acts or failure to act by the participant detrimental to the Company or any of its subsidiaries.

	 
	
(b)Miscellaneous Termination Provisions  

	 
	
Unless otherwise determined by the Committee, an authorized leave of absence shall not constitute a termination of employment for purposes of this Plan. For purposes of this section, retirement means that a participant terminates employment at or after the date on which the participant reaches any normal retirement age specified in any policy adopted by the Board or, in the absence of such policy, age 65.

	 
	
9.ADJUSTMENT OF SHARES

	 
	
In the event of any change in the Common Stock of the Company by reason of any stock dividend, stock split, recapitalization, reorganization, merger, consolidation, split-up, combination, or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares authorized under Section 4, the number and kind of shares which thereafter are subject to options under the Plan and the number and kind of unexercised options shares set forth in awards under outstanding agreements and the price per share shall be adjusted automatically consistent with such change to prevent substantial dilution or enlargement of the rights granted to, or available for, participants in the Plan.

	 
	
10.WITHHOLDING TAXES

	 
	
All stock issuable or payable to a participant upon exercise of any stock option under the terms of this Plan is subject to such federal, state and local income and employment tax withholdings as payments of this type are normally subject.  Whenever the Company proposes or is required to issue or transfer shares of Common Stock under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount of cash sufficient to satisfy any federal, state and/or local income and employment withholding tax requirements prior to the delivery of any certificate or certificates for such shares or to take any other appropriate action to satisfy such withholding requirements.  Notwithstanding the foregoing, the recipient may satisfy such obligation in whole or in part by electing to have the Company withhold shares of Common Stock from the shares to which the recipient is otherwise entitled. 

	 
	
11.RESTRICTIONS ON EXERCISE; NO EMPLOYMENT RIGHTS

	 
	
No outstanding option may be exercised by any person if the employee to whom the option is granted is, or at any time after the Date of Grant has been, in competition with the Company.  The Committee has the sole discretion to determine whether an employee's actions constitute competition with the Company or an affiliated company.  The Committee may impose such other terms and conditions on the exercise of options as it deems appropriate to serve the purposes for which this Plan has been established.

	 
	
The Plan and any options granted under the Plan shall not confer upon any participant any right with respect to continuance as an employee of the Company or any subsidiary, nor shall they interfere in any way with the right of the Company or any subsidiary to terminate the participant's position as an employee at any time.

	 
	
12.RIGHTS AS A SHAREHOLDER

	 
	
The recipient of any option under the Plan shall have no rights as a shareholder with respect thereto unless and until certificates for the underlying shares of Common Stock are issued to the recipient.

	 
	
13.AMENDMENT AND DISCONTINUANCE OF PLAN

	 
	
This Plan may be amended, modified or terminated by the Committee or by the shareholders of the Company, except that the Committee may not, without approval of a majority of the shareholders present in person or by proxy, materially increase the benefits accruing to participants under the Plan, materially increase the maximum number of shares as to which options may be granted under the Plan, change the minimum exercise price of options, change the class of eligible persons, extend the period for which options may be granted or exercised, or withdraw the authority to administer the Plan from the Committee or another committee of the Board of Directors.  Notwithstanding the foregoing, to the extent permitted by law, the Committee may amend the Plan without the approval of shareholders, to the extent it deems necessary to cause the Plan to comply with Rule 16b-3 or any successor rule, as it may be amended from time to time or as otherwise permitted under Rule 16b-3 promulgated under the Exchange Act and the Code.  Except as required by law, no amendment, modification, or termination of the Plan may, without the written consent of a participant to whom any option shall theretofore have been granted, adversely affect the rights of such participant under such option.

	 
	
14.CHANGE IN CONTROL

	 
	
(a)  Notwithstanding other provisions of the Plan, in the event of a change in control of the Company (as defined in subsection (c) below), all options shall become immediately vested and exercisable in full, unless directed otherwise by a resolution of the Committee adopted prior to and specifically relating to the occurrence of such change in control.

	 
	
(b)  In the event of a change in control each participant holding an exercisable option (i) shall have the right at any time thereafter during the term of such option to exercise the option in full notwithstanding any limitation or restriction in any option agreement or in the Plan, and (ii) may, after written notice to the Company within 60 days after the change in control, require the Company to redeem such options for cash at a price equal to the difference between the fair market value of the stock immediately after such change of control was publicly announced and the exercise price per share of the option.

	 
	
(c)  For purposes of this section, "change in control" means:  

	 
	
1)there shall be consummated

	 
	
i)any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which any shares of the Company's common stock are to be converted into cash, securities or other property, provided that the consolidation or merger is not with a corporation which was a wholly-owned subsidiary of the Company immediately before the consolidation or merger; or

	 
	
ii)any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company (other than to one or more directly or indirectly wholly-owned subsidiaries of the Company); or

	 
	
2)the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or

	 
	
3)any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of 30% or more of the Company's then outstanding common stock, provided that such person shall not be a wholly-owned subsidiary of the Company immediately before it becomes such 30% beneficial owner; or

	 
	
4)individuals who constitute the Company's Board of Directors on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least three quarters of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this clause (4), considered as though such person were, and shall be deemed to be, a member of the Incumbent Board.

	 
	
15.  EFFECTIVE DATE

	 
	
The effective date of the Plan is the date of shareholder approval of the Plan.

	 
	
16.  DEFINITIONS

	 
	
Any terms or provisions used herein which are defined in Sections 162(m), 421, or 422 of the Code, or the regulations thereunder or corresponding provisions of subsequent laws and regulations in effect at the time awards are made hereunder, shall have the meanings as therein defined.

	 
	
17.  GOVERNING LAW

	 
	
To the extent not inconsistent with the provisions of the Code that relate to awards, this Plan and any award agreement adopted pursuant to it shall be construed under the laws of the State of New York.

	 
	
Approved by Shareholders March 11, 1998.

	

	
CANANDAIGUA NATIONAL CORPORATIONCANANDAIGUA NATIONAL CORPORATION

	
Exhibit 10.2 CANANDAIGUA NATIONAL CORPORATION 1989 INCENTIVE STOCK PLAN

	 
	
CANANDAIGUA NATIONAL CORPORATION

	
1989 INCENTIVE STOCK PLAN

	 
	
1. PURPOSES

	
The purposes of this 1989 Incentive Stock Plan ("Plan") are to further the growth and profitability of Canandaigua National Corporation and its affiliates by providing a stock incentive program that will be an incentive to Key Employees (as defined below) of Canandaigua National Corporation and its affiliates whose contributions are important to the continued success of the Company.

	 
	
2. DEFINITIONS

	 
	
(a) "Board" means the Board of Directors of Canandaigua National Corporation. 

	 
	
(b) "Committee" means the Compensation Committee of the Board or such other Committee as the Board designates to administer the Plan. The Committee shall consist of not less than three members of the Board who axe not employees.

	 
	
(c) "Common Stock means Common Stock of Canandaigua National Corporation.

	 
	
(d) "Company" means Canandaigua National Corporation and any directly or indirectly controlled subsidiary.

	 
	
(e) "Redemption Value" of a share of Common Stock on any date means the higher of: (1) the book value of a share of Common Stock as of the end of the fiscal quarter of the Company immediately preceding the valuation date (2) if the shares are listed on a national stock exchange, the average of the highest and lowest sale prices of a share of Common Stock on the business day next prior to that date. In the event no sales are made on such day, the Redemption Value for such day shall be deemed to be (i) the average of the closing  bid and asked prices for that day on the principal stock exchange on which the shares are traded; (ii) if the shares are not listed on any such exchange, the average of the closing bid and asked prices of a share of Common Stock quoted by the NASDAQ System on the business day next prior to such date; or (iii) if the shares are neither listed on a national stock exchange nor quoted on the NASDAQ System, the higher of: (A) the most recent valuation of a share of Common Stock for the Company's Employee Stock Ownership Plan; or (B) the average price per share of Common Stock at the most recent public auction of shares of Common Stock which is determined to be a representative auction by the Committee.

	 
	
(f) "Key Employees" means senior officers and other key employees of the Company.

	 
	
(g) "Participant" means a Key Employee of the Company to whom a grant has been made by the Committee.

	 
	
(h) "Plan" means the Canandaigua National Corporation 1989 Incentive Stock Plan.

	 
	
3. ADMINISTRATION

	
Within the limitations prescribed herein, the Plan shall be administered by the Committee. The Committee shall have all the powers vested in it by the terms of the Plan. The Committee shall be authorized to interpret the Plan and the grants and awards made under the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to make any determinations it believes necessary or advisable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any grant or award thereunder in the manner and to the extent the Committee deems desirable. Any determination by the Committee in the administration of the Plan shall be in its sole discretion and conclusive. The Committee may act only by a majority of its members in office, except that the members thereof may authorize any one or more of their number or any officer of the Company to execute and deliver documents on behalf of the Committee.

	 
	
4. GRANTS AND AWARDS

	 
	
Grants and awards under the Plan may be in the form of (i) phantom stock awards (PSA) as described in Section 5 and (ii) stock appreciation rights (SAR) as described in Section 6.

	 
	
5. TERMS AND CONDITIONS OF PHANTOM STOCK AWARDS

	 
	
(a) Phantom stock awards covering phantom shares of Common Stock ("PSAs") may be granted to such Key Employees in such numbers and at such times during the term of the Plan as the Committee shall determine.

	 
	
(b) Each PSA granted under the Plan shall be evidenced by a written PSA agreement executed by the Company and the participant in such form and subject to such terms and conditions as the Committee shall determine and as are not inconsistent with the provisions of the Plan, including the following: 

	 
	
     (i) Number of phantom shares -- The number of phantom shares of Common Stock covered by a PSA shall be determined by the Committee.

	 
	
     (ii) Duration of PSAs -- The duration of any PSA shall be determined by the Committee.

	 
	
     (iii) Exercise of a PSA -- Each PSA shall be exercisable, with respect to phantom shares of Common Stock, at such times as determined by the Committee. The Committee may at any time, in its sole discretion, accelerate the time during which a PSA shall be exercisable in whole or in part. PSAs may be exercised from time to time by written notice to the Company stating the number of phantom shares of Common Stock with respect to which the PSA is being exercised.

	 
	
     (iv) Payment -- Upon the exercise of a PSA, the Company shall pay to the Participant an amount equal to the product of the Redemption Market Value (as determined in 2 (e) above) of a share of Common Stock and the number of phantom shares of Common Stock with respect to which the PSA is exercised. Such payment may be made in cash or in shares of Common Stock or a combination of both, as the Committee shall determine.

	 
	
     (v) Non-transferability of PSAs -- a PSA shall not be transferable by a Participant except by will or the laws of descent and distribution, and shall be exercisable, during his lifetime, only by him. 

	 
	
     (vi) Termination of Employment -- On the termination of a Participant's employment, each PSA previously granted to him shall expire; provided, however, if employment is terminated by reason of death, disability, retirement or any other reason approved by the Committee, the PSA shall terminate at such time as determined by the Committee.

	 
	
6. STOCK APPRECIATION RIGHTS

	 
	
(a) Stock appreciation rights covering shares of Common Stock ("SARs") may be granted to such Key Employees in such numbers and at such times during the term of the Plan as the Committee shall determine. 

	 
	
(b) Each SAR granted under the Plan shall be evidenced by a written agreement executed by the Company and the participant, in such form and subject to such terms and conditions as the Committee shall determine and as are not inconsistent with the provisions of the Plan, including the following:

	 
	
     (i) Number of stock appreciation rights - The number of stock appreciation rights covered by a SAR shall be determined by the Committee.

	 
	
     (ii) Duration of SARs - The duration of any SAR shall be determined by the Committee.

	 
	
     (iii) Exercise of a SAR - Each SAR shall be exercisable at such times as determined by the Committee. The Committee may at any time, in its sole discretion, accelerate the time during which a SAR shall be exercisable in whole or in part. SARs may be exercised from time to time by written notice to the Company stating the portion of a SAR which is being exercised.

	 
	
     (iv) Payment - The "Award Base Value" of a SAR (the base from which the value of the SAR is measured at its subsequent exercise) shall be the value set by the Committee when the SAR is awarded. A SAR shall entitle the recipient to receive a payment equal to the excess of the Redemption Value (as determined in 2 (e) above) of a share of Common Stock on the date of exercise over the award base value of the SAR. Such payment may be made in cash or in shares of Common Stock or a combination of both, as the Committee shall determine.

	 
	
     (v) Non-transferability of SARs - A SAR shall not be transferable by a Participant except by will or the laws of descent and distribution and shall be exercisable, during his lifetime, only by him.

	 
	
     (vi) Termination of Employment - on the termination of a Participant's employment, each SAR previously granted to him shall expire; provided, however, if employment is terminated by reason of death, disability, retirement or any other reason approved by the Committee, the SAR shall terminate at such time as determined by the Committee.

	 
	
7. REGULATORY APPROVALS AND LISTING

	 
	
The Company shall not be required to issue any certificate or certificates for shares of Common Stock upon the exercise of a PSA or SAR prior to (a) the obtaining of any approval from any governmental agency which the Company shall, in its sole discretion, determine to be necessary or advisable, (b) the admission of such shares to listing on any stock exchange on which the Common Stock may then be listed, and (c) the completion of any registration or other qualification of such shares under any state or Federal law or rulings or regulations of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable.

	 
	
8. ADJUSTMENTS

	 
	
(a) In the event of changes in the Common Stock, by reason of a Common Stock dividend or stock split-up, such commensurate adjustment as may be deemed equitable may be made by the Committee in its discretion to give effect to such changes or any other change affecting the Common Stock. 

	 
	
(b) In case the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or in the case of a dissolution or liquidation of the Company, the Board or the Board of Directors of any corporation assuming the obligations of the Company hereunder, shall as to outstanding PSAs and SARs, take any of the following action: (i) make appropriate provision for protection of any such outstanding PSAs and SARs by the substitution of grants or awards on substantially similar terms; or (ii) upon written notice to a Participant, provide that any outstanding PSAs or SARs are immediately exercisable and must be exercised within sixty (60) days of the date of such notice or they will be terminated.

	 
	
9. TERM

	 
	
The Plan shall become effective on the date it is approved by the Board and shall continue until terminated by the Board.

	 
	
10. AMENDMENT AND TERMINATION

	 
	
The Board may, from time to time, amend the Plan in any manner which it deems is in the best interests of the Company, Notwithstanding the above, no amendment or termination shall, without the consent of a Participant, affect his rights with respect to a grant previously made or during the course of any payout period.

	 
	
11. RIGHTS AS SHAREHOLDERS

	 
	
A Participant shall possess no rights as shareholder with respect to the shares covered by a PSA or SAR granted to him until the issuance to the Participant of the stock certificate for the shares acquired upon exercise of a PSA or SAR.

	 
	
12. GOVERNING LAW

	 
	
The Plan shall be governed by and construed and enforced in accordance with the laws of New York State.

	 
	
13. TAXES

	 
	
At the time a Participant is taxable with respect to PSAs or SARs granted hereunder, or the exercise or surrender of the same, the Company shall have the right to withhold from amounts payable to the Participant under the Plan or from other compensation payable to him in its sole discretion, or to require the Participant to pay to it, an amount sufficient to satisfy all federal, state and/or local withholding tax requirements. In the discretion of the Committee, any required withholding amounts with respect to exercise of PSAS and SARs may be satisfied by the holding back by the Company of that number of shares of Common Stock to be issued that have a Fair Market Value as of the exercise date sufficient to satisfy such amount.

	 
	
14. NO RIGHT TO CONTINUED EMPLOYMENT

	 
	
Participation in the Plan shall not give any Key Employee any right to remain in the employ of the Company. The Company reserves the right to terminate the employment of any Participant at any time not withstanding the  provisions of the Plan.

	 
	
Approved, as amended, by the Board of Directors July 11, 1990 and January 6, 1992.

	 
	
(form of award)

	
[Canandaigua National Letterhead]

	 
	
                                                                       _________________, 1991

	
Dear___________________

	 
	
     I am pleased to inform you that the Compensation Committee (the "Committee") of the Board of Directors of Canandaigua National Corporation (the "Company") has selected you to participate in the Canandaigua National Corporation 1989 Incentive Stock Plan (the "Plan"). The terms and conditions of your participation are described in the balance of this letter. 

	 
	
     The Plan text governs the operation of the Plan as well as the terms and conditions of this letter agreement between us, and is hereby incorporated into this letter agreement by reference.  To the extent the terms of the Plan and letter are inconsistent, the terms of the letter are to govern. Any capitalized term used in this letter and not defined herein shall have the same meaning as it is defined in the Plan. A copy of the Plan text is enclosed. If you have any questions, please contact___________________.

	 
	
PHANTOM STOCK AWARD

	 
	
You are hereby granted, effective ______________, a phantom stock award ("PSA") for _______ phantom shares of Common Stock of the Company. Your PSA represents the right to receive, for each phantom share of Common Stock covered by the PSA, payment equal to the Redemption Value of a share of Common Stock on the date of exercise. Payment will be made in cash or shares of Common Stock or a combination of both, at the Committee's discretion. 

	 
	
Your PSA shall become exercisable upon the later of the following: 

	
     1) reaching the age of 55, or 

	
     2) attaining 15 years of continuous full-time employment with the Company. 

	 
	
In any event, your PSA shall become exercisable upon your normal retirement. However, the Committee may, in its sole discretion, accelerate the time during which your PSA shall be exercisable in whole or in part. 

	 
	
You exercise your PSA by delivering to _____________, the ____________ the of the Company, written notice specifying the number of phantom shares of the Company as to which the PSA is exercised. No payment is required from you. As soon as possible after written notice of surrender is delivered, you will be paid, for each phantom share of Common Stock as to which your PSA is exercised the Redemption Value of a share of Common Stock on the date of exercise. Payment will be made in cash or shares of Common Stock or a combination of both, at the Committee's discretion.

	 
	
STOCK APPRECIATION RIGHTS

	 
	
You are hereby granted, effective ____________, ______ stock appreciation rights covering shares of Common Stock of the Company ("SARs"). Each of your SARs represents the right receive payment equal to the amount, if any, by which the Redemption Value of a share of Common Stock on the date of exercise exceeds $_____, the _(year)_ Award Base of a share of Common Stock. 

	 
	
Your SARs shall become exercisable at five years from the effective date and may thereafter be exercised in whole or in part. 

	 
	
You exercise your SARs by delivering to_____________, the ______________ of the Company, written notice specifying the number of SARs exercised. No payment is required from you. As soon as possible after written notice is delivered, you will be paid, for each SAR exercised, the amount, if any, by which the Fair Market Value of a share of Common Stock on the date of exercise exceeds the  Award Base Value set forth above.

	 
	
TERMINATION OF EMPLOYMENT

	 
	
On termination of your employment with the Company prior to the date they become exercisable, your PSA will be canceled. However, your PSA and SARs will not be canceled and shall be exercisable at such times as the Committee shall determine in its sole discretion if termination is by reason of: (1) death, (2) permanent disability or (3) as determined in the sole discretion of the Committee: (i) normal retirement at or after age sixty-five, (ii) early retirement prior to age sixty-five, or (iii) in extraordinary circumstances. 

	 
	
Notwithstanding the foregoing, if your employment with the Company is terminated for "cause", your PSA and SARs shall be canceled. 

	 
	
AUTHORITY OF COMMITTEE

	 
	
The Committee has the authority, in its sole discretion, to interpret the Plan and to make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. The scope of the Committee's authority is more fully described in the Plan text. All determinations and actions of the Committee are final, conclusive and binding on you.

	 
	
MISCELLANEOUS

	 
	
You have no right to assign or transfer your PSA or SARs, except by will or the laws of descent and distribution. During your life, your PSA or SARs are exercisable only by you. 

	 
	
Payments will be made to you net any tax withholding. No payments will be made until written notice of exercise or other written request for payment is delivered to the _______________of the Company. 

	 
	
Nothing in this letter agreement or in the Plan gives you any right to continue in the employment of the Company or any subsidiary or affiliate. 

	 
	
Awards under the Plan are not included in the determination of benefits for you under any fringe benefit plan of the Company. 

	 
	
This letter agreement shall be binding on and inure to the benefit of the Company and its subsidiaries, affiliates and parent corporations (and their successors and assigns) and you (and your estate).

	 
	
This letter agreement shall be governed, construed and enforced in accordance with the laws of the State of New York. 

	 
	
If the foregoing is acceptable to you, kindly acknowledge your acceptance by signing the enclosed copy of this letter and returning it to _______________________ by_____________________.

	 
	
Again, my congratulations to you on being selected to participate in the Plan this year.

	 
	
Very truly yours,

	
CANANDAIGUA NATIONAL CORPORATION

	
BY__________________________

	
      George W. Hamlin, IV, President

	 
	
AGREED TO AND ACCEPTED

	 
	
this ______________day of _________________,    (year)   

	 
	
________________________

	
           Plan Participant

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