CANANDAIGUA
NATIONAL CORPORATION
STOCK OPTION
PLAN
(as
amended and restated effective January 1, 2009)
1.
BACKGROUND AND
PURPOSE
Canandaigua National
Corporation (the “Corporation”) established the
Canandaigua National Corporation Stock Option Plan (the
“Plan”) effective March 11, 1998. The purpose of
the Plan is to enable the Corporation and its subsidiaries to
retain executive officers and other key employees, and provide them
with an incentive to maintain and enhance the long-term performance
of the Corporation and its subsidiaries, by granting eligible
employees stock options pursuant to the rules set forth in the
Internal Revenue Code of 1986, as amended (the
“Code”).
As
originally established, the Plan provided for the granting of
non-qualified stock options (“NSOs”) and incentive
stock options (“ISOs”). As no ISOs have been
granted under the Plan and no ISOs will be granted in the future,
the Plan is amended and restated, effective January 1, 2009, as set
forth herein, to eliminate provisions relating to ISOs. The
Plan is also amended, effective January 1, 2009, so that any NSOs
granted, vested and immediately exercisable prior to January 1,
2005 shall not be subject to Code Section 409A, and all other NSOs
may qualify for the stock right exemption from Code Section 409A
(and be treated as not providing for deferral of compensation under
Code Section 409A).
2.
ADMINISTRATION
The Plan
shall be administered by the Compensation Committee of the
Corporation’s Board of Directors (the
“Committee”). This Committee shall consist of at
least three members of the Corporation’s Board of Directors
who are not employees 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 (“Rule 16b-3”) and the Code. The
Committee shall possess the authority and discretion to: (i)
determine the employees of the Corporation or its subsidiaries to
whom, and the time or times at which, NSOs shall be granted; (ii)
determine, at the time of grant, the number of shares of Common
Stock which can be purchased upon exercise of an NSO and any
appropriate terms and conditions applicable to the NSO; (iii)
prescribe the form of NSO agreements and make any amendments to
such agreements or NSOs; (iv) interpret the Plan and the NSO
agreements; (v) make and amend rules and regulations relating to
the Plan; (vi) make all other determinations necessary or advisable
for the administration of the Plan; and (vii) amend or modify the
Plan, except as otherwise provided in Section 12. 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
NSO granted hereunder.
Notwithstanding the
above, the Committee shall not exercise its authority in any manner
inconsistent with: (i) the terms of this Plan; or (ii) the
requirements for NSOs granted, vested and immediately exercisable
prior to January 1, 2005 to not be subject to Code
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Section
409A; or (iii) the requirements for other NSOs to qualify for the
stock right exemption from Code Section 409A (and be treated as not
providing for deferral of compensation under Code Section 409A).
Furthermore: (i) no member of the Committee shall interpret
the Plan with respect to, or exercise any discretion, act on, or
decide, any matter relating to himself or any of his rights or
benefits under the Plan; and (ii) any duty or function which may be
performed by the Committee or its delegates under the Plan may
instead be performed by the Board if the Board so determines in its
sole discretion.
3.
ELIGIBLE
EMPLOYEES
NSOs may
be granted under the Plan only to employees of the Corporation and
its subsidiaries who have the capability of making a substantial
contribution to the success of the Corporation or a subsidiary.
For purposes of this Plan, “subsidiaries” shall
mean and include only those corporations in which the Corporation
has a “controlling interest,” as defined for purposes
of Code Section 409A.
4.
SHARES
AVAILABLE
NSOs
shall be granted only for Common Stock. For purposes of this
Plan, “Common Stock” means a class of Corporation
stock: (i) with no preference as to distributions (other than
distributions of Common stock and distributions in liquidation of
the Corporation); and (ii) which is not subject to a mandatory
repurchase obligation (other than a right of first refusal) or to a
put or call right that is not a lapse restriction as defined in
Treasury Regulation Section 1.83-3(i), if the Common Stock price
under the obligation or right is based on a measure other than the
fair market value (disregarding lapse restrictions as defined in
Treasury Regulation Section 1.83-3(i)) of the equity interest in
the Corporation represented by the Common Stock. As of the
effective date of this Plan, the total number of shares of the
Corporation’s Common Stock (par value of $50.00 per share)
available in the aggregate for NSOs under this Plan was 16,000.
Shares of Common Stock to be granted may be authorized and
unissued shares or may be treasury shares.
If a NSO
expires, terminates or is canceled without being exercised or
becoming vested, new NSOs may thereafter be granted under the Plan
covering such shares of Common Stock unless otherwise required
under applicable laws, rules or regulations. No NSO may be granted
more than ten (10) years after the effective date of the
Plan.
5.
TERMS AND CONDITIONS
FOR NSOs
(a)
NSO
Agreements. Each NSO granted under the Plan shall be
evidenced, at the time of grant, by a NSO agreement in such form as
the Committee shall approve from time to time, which agreement
shall conform to the terms of this Plan and set forth: (i) the
number of shares which can be purchased upon exercise of the NSO;
(ii) the exercise price for the NSO, which shall never be less than
the fair market value, as of the date of grant, of the Common Stock
which can be purchased with the NSO (disregarding lapse
restrictions as defined in § 1.83-3(i) and determined in
accordance with an appropriate method prescribed in regulations
issued under Code Section 409A);
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(iii)
the duration of the NSO; (iv) the exercise period for the NSO; (v)
the vesting terms applicable to the NSO; and (vi) such other terms
and conditions as the Committee deems appropriate at the time of
grant.
(b)
Notwithstanding the
above, the expiration of a NSO will be tolled if the NSO holder
cannot exercise the NSO because of applicable Federal, state,
local, or foreign law, or if exercise of the NSO would jeopardize
the Corporation’s ability to continue as a going concern;
provided the exercise period is not extended more than 30 days
after the first date this circumstance no longer exists.
(c)
NSOs
Nontransferable. Each NSO by its terms shall not be
transferable by the NSO holder (the “participant”)
other than: (i) by will or the laws of descent and distribution; or
(ii) to the extent permitted under the NSO agreement, Rule 16b-3
and Code Section 409A, by gift to family members or entities
beneficially owned by family members, to charitable non-profit
organizations recognized as exempt from federal income tax under
the provisions of the Code, or other permitted transferees under
Rule 16b-3 and the stock right exemption from Code Section 409A.
Each NSO 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 NSO grant and/or exercise to be exempt
under Rule 16b-3, each NSO (or the shares of Common Stock which can
be purchased with the NSO) must be held by the participant for at
least six months following the date on which the NSO was
granted.
(d)
Exercise
Terms. A participant may exercise a NSO granted to him no
earlier than the date specified in the NSO agreement; provided,
however, upon retirement of a participant the Committee has the
discretionary authority to accelerate, within the original term of
the NSO, the time at which the NSO may be exercised, unless such
acceleration would cause the NSO to fail to satisfy the stock right
exemption from Code Section 409A. For purposes of this
provision and Section 7, “retirement” means the
participant’s termination of employment on or after he
attains (age 55).
NSOs may
be partially exercised any time during the period they are
exercisable, but may only be exercised to the extent permitted
under Rule 16b-3.
(e)
Payment
of Exercise Price. A NSO shall be exercised upon written
notice to the Corporation accompanied by payment in full for the
shares of Common Stock being purchased. The payment shall be
equal to the exercise price and made in cash or by check
or
