Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This sets forth the terms of the Employment Agreement made as of January 1, 2019
between (i) COMMUNITY BANK SYSTEM, INC., a Delaware corporation and registered
bank holding company (“CBSI”), and COMMUNITY BANK, N.A., a national banking
association (“CBNA”), both having offices located in Dewitt, New York
(collectively, the “Employer”), and (ii) JOSEPH F. SERBUN, an individual
currently residing at Syracuse, New York (“Employee”). This Agreement is
effective as of January 1, 2019 and supersedes the Employment Agreement between
the parties dated January 1, 2016.

 

W I T N E S S E T H

 

IN CONSIDERATION of the promises and mutual agreements and covenants contained
herein, and other good and valuable consideration, the parties agree as follows:

 

1.Employment.

 

(a)       Term. Employer shall continue to employ Employee, and Employee shall
continue to serve, as Chief Credit Officer and Executive Vice President of
Employer for a term commencing on January 1, 2019 and ending on December 31,
2021 (“Period of Employment”), subject to termination as provided in paragraph 3
hereof.

 

(b)       Salary. During the Period of Employment, Employer shall pay Employee a
base salary at an annual rate of not less than $334,750 (“Base Salary”).
Employee’s Base Salary shall be reviewed and adjusted annually in accordance
with Employer’s regular payroll practice for executive employees. Employee’s
Base Salary is payable in accordance with Employer’s regular payroll practices
for executive employees.

 

(c)       Incentive Compensation. During the Period of Employment, Employee
shall be entitled to annual incentive compensation as a Tier 2 Executive of the
Employer pursuant to the terms of the Management Incentive Plan, which has been
approved by the Board of Directors of Employer to cover Employee and other key
personnel of Employer, as well as other incentive plans that may be established
by Employer and that are applicable to Employer’s executives of similar salary
tier to Employee. Upon termination of Employee’s employment pursuant to
subparagraph 3(a), 3(b), 3(c) or paragraph 6, Employee shall be entitled to a
pro rata portion (based on Employee’s complete months of active employment in
the applicable year) of the annual incentive awards that are payable with
respect to the year during which the termination occurs or, if the annual awards
for such year are not determinable at the time of termination, then the
immediately prior year’s awards shall be used to determine such pro rata
portion.

 

2.       Duties during the Period of Employment. Employee shall have full
responsibility, subject to the control of the Board and Employer’s President and
Chief Executive Officer or authorized designee, for the supervision of all
aspects of Employer’s lending and credit operations, including all activities
related to commercial lending, residential lending, direct and indirect consumer
lending, credit administration, cash management and regional banking, and the
discharge of such other duties and responsibilities to Employer as may from time
to time be reasonably assigned to Employee by the Employer’s President and Chief
Executive Officer, or the authorized designee of the Board of Directors.
Employee shall report to the Executive Vice President and Chief Operating
Officer of Employer or to such other officer as designated by Employer’s
President and Chief Executive Officer. Employee shall devote Employee’s best
efforts to the affairs of Employer, serve faithfully and to the best of
Employee’s ability and devote all of Employee’s working time and attention,
knowledge, experience, energy and skill to the business of Employer, except that
Employee may affiliate with professional associations, business, civic and
charitable organizations, provided that such services and affiliations are not
inconsistent with and do not unreasonably interfere with the performance of
Employee’s duties under this Agreement. Employee shall serve on the Board of
Directors of, or as an officer of, Employer’s affiliates, without additional
compensation if requested to do so by the Board of Directors of Employer.
Employee shall receive only the compensation and other benefits described in
this Agreement for Employee’s duties on behalf of Employer or any of its
affiliates.

 

  

 

 

3.       Termination. Employee’s employment by Employer shall be subject to
termination as follows:

 

(a)       Expiration of the Term. This Agreement shall terminate automatically
at the expiration of the Period of Employment unless the parties enter into a
written agreement extending Employee’s employment, except for the continuing
obligations of the parties as specified hereunder.

 

(b)       Termination Upon Death. This Agreement shall terminate upon Employee’s
death. In the event this Agreement is terminated as a result of Employee’s
death, Employer shall continue payments of Employee’s Base Salary for a period
of 90 days following Employee’s death to the beneficiary designated by Employee
on the “Beneficiary Designation Form” attached to this Agreement as Appendix A.
Any restrictions on shares of CBSI stock previously granted to Employee shall be
waived as of the date of death, and Employee’s beneficiary shall be free to
dispose of any restricted stock previously granted to Employee by Employer.
Additionally, Employer shall treat as immediately exercisable all unexpired
stock options issued by Employer and held by Employee that are not exercisable
or that have not been exercised, so as to permit Employee’s beneficiary to
purchase the balance of CBSI stock not yet purchased pursuant to said options
until the end of the full exercise period provided in the original grant of the
option right, determined without regard to Employee’s death or termination of
employment.

 

(c)       Termination Upon Disability. Employer may terminate this Agreement
upon Employee’s disability. For the purpose of this Agreement, Employee’s
inability to perform substantially all of Employee’s duties under this Agreement
by reason of physical or mental illness or injury for a period of 26 successive
weeks (the “Disability Period”) shall constitute disability. The determination
of disability shall be made by a physician selected by Employer and a physician
selected by Employee; provided, however, that if the two physicians so selected
shall disagree, the determination of disability shall be submitted to
arbitration in accordance with the rules of the American Arbitration Association
and the decision of the arbitrator shall be binding and conclusive on Employee
and Employer. During the Disability Period, Employee shall be entitled to 100%
of Employee’s Base Salary otherwise payable during that period, reduced by all
other Employer-provided income replacement benefits to which Employee may be
entitled for the Disability Period on account of such disability (including, but
not limited to, benefits provided under any disability insurance policy or
program, workers’ compensation law, or any other benefit program or
arrangement). Upon termination pursuant to this disability provision, any
restrictions on shares of CBSI stock previously granted to Employee shall be
waived and Employee shall be free to dispose of any restricted stock granted to
Employee. Additionally, Employer shall treat as immediately exercisable all
unexpired stock options issued by Employer and held by Employee that are not
exercisable or that have not been exercised, so as to permit the Employee to
purchase the balance of CBSI stock not yet purchased pursuant to said options
until the end of the full exercise period provided in the original grant of the
option right, determined without regard to Employee’s disability or termination
of employment.

 

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(d)       Termination for Cause. Employer may terminate Employee’s employment
immediately for “cause” by written notice to Employee. For purposes of this
Agreement, a termination shall be for “cause” if the termination results from
any of the following events:

 

(i)       Employee’s willful breach of any material provision of this Agreement,
which breach Employee shall have failed to cure within thirty (30) days
following Employer’s written notice to Employee specifying the nature of the
breach;

 

(ii)       Any documented misconduct by Employee as an executive or director of
Employer, or any subsidiary or affiliate of Employer for which Employee is
performing services hereunder, which is material and adverse to the interests,
monetary or otherwise, of Employer or any subsidiary or affiliate of Employer;

 

(iii)       Unreasonable neglect or refusal to perform the duties assigned to
Employee under or pursuant to this Agreement, unless cured within thirty (30)
days following Employer’s written notice to Employee specifying the nature of
the neglect or refusal;

 

(iv)       Conviction of a crime involving any act of dishonesty, acts of moral
turpitude, or the commission of a felony;

 

(v)       Adjudication as a bankrupt, which adjudication has not been contested
in good faith, unless bankruptcy is caused directly by Employer’s unexcused
failure to perform its obligations under this Agreement;

 

(vi)       Documented failure to follow the reasonable, written instructions of
the Board of Directors of Employer, the Employer’s Executive Vice President and
Chief Operating Officer, or the Employer’s Chief Executive Officer or authorized
designee, provided that the instructions do not require Employee to engage in
unlawful conduct; or

 

(vii)       A willful violation of a material rule or regulation of the Office
of the Comptroller of the Currency or of any other regulatory agency governing
Employer or any subsidiary or affiliate of Employer.

 

Notwithstanding any other term or provision of this Agreement to the contrary,
if Employee’s employment is terminated for cause, Employee shall forfeit all
rights to payments and benefits otherwise provided pursuant to this Agreement;
provided, however, that Base Salary shall be paid through the date of
termination.

 

(e)       Termination For Reasons Other Than Cause. In the event Employer
terminates Employee’s employment during the Period of Employment or within 24
months following expiration of the Period of Employment for reasons other than
“cause” (as defined in paragraph 3(d)), or in the event that Employee terminates
his employment with Employer during the Period of Employment for “good reason”
(as defined in paragraphs 6(d)(i) or 6(d)(iii) and subject to the notice and
right to cure provisions of paragraph 6(d)), then Employee shall be entitled to
a severance benefit equal to the greater of (i) 175 percent of the sum of the
annual Base Salary in effect at the time of termination and the most recent
payment to Employee under the Management Incentive Plan, or (ii) amounts of Base
Salary and expected Management Incentive Plan payments that otherwise would have
been payable through the balance of the unexpired term of this Agreement. Unless
Employee is a “specified employee” (as determined in accordance with Internal
Revenue Code Section 409A), the benefit payable pursuant to this paragraph 3(e)
shall be payable in equal biweekly installments over the 12 month period that
begins on the first day of the month following Employee’s termination. If
Employee is a “specified employee” (as determined in accordance with Internal
Revenue Code Section 409A), then installment payments during the first six
months of the 12 month installment period shall be limited to the extent
required by Internal Revenue Code Section 409A, any unpaid installment amounts
shall be paid immediately after such six-month period and installment payments
due during the remaining six months shall be paid as scheduled.

 

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In addition to the cash benefit described in the foregoing paragraph 3(e),
Employer shall: (iii) waive all restrictions on all CBSI stock previously
granted to Employee and permit Employee to dispose of any restricted stock; and
(iv) treat as immediately exercisable all unexpired stock options held by
Employee that are not exercisable or that have not been exercised, so as to
permit Employee to purchase the balance of CBSI stock not yet purchased pursuant
to said options until the end of the full exercise period provided in the
original grant of the option right determined without regard to Employee’s
termination of employment.

 

Notwithstanding the foregoing, amounts payable under clauses (i) or (ii) of this
paragraph 3(e) shall be reduced by any payments made to Employee under
paragraphs 6(a)(i) and (ii) of this Agreement and any payments made to Employee
under any severance or similar plan, policy or program maintained by Employer.

 

4.       Fringe Benefits.

 

(a)       Benefit Plans. During the Period of Employment, Employee shall be
eligible to participate in any employee pension benefit plans (as that term is
defined under Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended), Employer-paid group life insurance plans, medical plans,
dental plans, long-term disability plans, business travel insurance programs and
other fringe benefit programs maintained by Employer for the benefit of (or
which are applicable to) its executive employees. Participation in any of
Employer’s benefit plans and programs shall be based on, and subject to
satisfaction of, the eligibility requirements and other conditions of such plans
and programs. Employer may require Employee to submit to an annual physical, to
be performed by a physician of his own choosing. Employee shall be reimbursed
for related expenses not covered by Employer’s health insurance plan, or any
other plan in which Employee is enrolled. Employee shall not be eligible to
participate in Employer’s Severance Pay Plan maintained for other employees not
covered by employment agreements.

 

(b)       Expenses. Upon submission to Employer of vouchers or other required
documentation, Employee shall be reimbursed for (or Employer shall pay directly)
Employee’s actual out-of-pocket travel and other expenses reasonably incurred
and paid by Employee in connection with Employee’s duties hereunder (including,
but not limited to, expenses incurred while performing duties outside the
general geographic area of Employee’s principle residence). Reimbursable
expenses must be submitted to the President and Chief Executive Officer of
Employer, or his designee, for review on no less than a quarterly basis.

 

(c)       Other Benefits. During the Period of Employment, Employee also shall
be entitled to receive the following benefits:

 

(i)       Paid time off of twenty-one (21) days during each calendar year (with
no carryover of unused vacation to a subsequent year) and any holidays that may
be provided to all employees of Employer in accordance with Employer’s holiday
policy;

 

(ii)       Reasonable sick leave;

 

(iii)       Reimbursement of membership fees and dues (but not personal
expenses) for up to two club memberships and other appropriate professional
associations, subject to the approval of Employer’s Executive Vice President and
Chief Operating Officer, the primary purpose of which memberships shall be the
promotion of Employer’s business interests. Reimbursements shall be made on or
before the last day of Employee’s taxable year following the taxable year in
which the expense was incurred;

 

(iv)       The use of an Employer-owned mobile telephone and the payment or
reimbursement of all Employer-related business charges incurred in connection
with the use of such telephone; and

 

(v)       The use of an Employer-owned or Employer-leased automobile, the
selection and replacement of which shall be subject to the approval of
Employer’s President and Chief Executive Officer (or the President and Chief
Executive Officer’s designee), or at Employer’s option an automobile allowance
to provide for a reasonably similar benefit consistent with similarly situated
executive employees.

 

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5.       Stock Options. Employer shall cause the Compensation Committee of the
Board to review whether Employee should be granted options to purchase shares of
common stock of CBSI. Such review may be conducted pursuant to the terms of the
Community Bank System, Inc. 2014 Long-Term Incentive Plan, a successor plan, or
independently, as the Compensation Committee shall determine. Reviews shall be
conducted no less frequently than annually.

 

6.       Change of Control.

 

(a)       If Employee’s employment with Employer (as an employee) shall cease
for any reason, including Employee’s voluntary termination for “good reason” (as
defined in paragraph 6(d) below), but not including Employee’s termination for
“cause”(as defined in paragraph 3 (d)) or Employee’s voluntary termination
without “good reason”, within two (2) years following a “Change of Control” (as
defined in paragraph 6(c)) that occurs during the Period of Employment, then:

 

(i)       Employer shall pay to the Employee the greater of (A) 300 percent of
the sum of the annual Base Salary in effect at the time of Employee’s
termination and the aggregate sum of all payments made to Employee during the 12
months preceding Employee’s termination pursuant to the Management Incentive
Plan (or equivalent successor plan), or (B) amounts of Base Salary and expected
payments under the Management Incentive Plan (or equivalent successor plan) that
otherwise would have been payable through the balance of the unexpired term of
this Agreement. Unless Employee is a “specified employee “(as determined in
accordance with Internal Revenue Code Section 409A), the amount determined
pursuant to this paragraph 6(a)(i) shall be payable in equal bi-weekly
installments over the 12-month period that begins on the first day of the month
following Employee’s termination. If Employee is a “specified employee” (as
determined in accordance with Internal Revenue Code Section 409A), then
installment payments during the first six months of the 12-month installment
period shall be limited to the extent required by Internal Revenue Code Section
409A, any unpaid installment amounts shall be paid immediately after such
six-month period and installment payments due during the remaining six months
shall be paid as scheduled.

 

(ii)       Subject to the applicable limitations of Internal Revenue Code
Section 409A that apply if Employee is a “specified employee “(as determined in
accordance with Internal Revenue Code Section 409A), Employer shall provide
Employee with fringe benefits, or the cash equivalents of such benefits,
identical to those described in paragraph 4(a) for a period of thirty (30)
months immediately following Employee’s qualifying termination.

 

(iii)       Employer shall treat as immediately exercisable all unexpired stock
options issued by Employer and held by Employee that are not otherwise
exercisable or that have not been exercised so as to permit Employee to purchase
the balance of CBSI stock not yet purchased pursuant to said options until the
end of the full exercise period provided in the original grant of the option
right, determined without regard to Employee’s termination of employment.

 

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(iv)       Employer shall waive all restrictions on any shares of CBSI stock
granted to Employee and permit Employee to dispose of such stock.

 

(b)       Notwithstanding any provision of this Agreement to the contrary, in
the event that any payment or benefit received or to be received by the Employee
in connection with a Change of Control (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement)(all such payments and
benefits being hereinafter called “Total Benefits”) would be subject (in whole
or in part) to the excise tax imposed pursuant to Internal Revenue Code Section
4999, then the cash severance payments provided in this Agreement shall first be
reduced, and the other payments and benefits hereunder shall thereafter be
reduced, to the extent necessary so that no portion of the Total Benefits will
be subject to such excise tax, but only if (i) is greater than or equal to (ii),
where (i) equals the reduced amount of such Total Benefits minus the aggregate
amount of federal, state and local income taxes on such reduced Total Benefits,
and (ii) equals the unreduced amount of such Total Benefits minus the sum of (A)
the aggregate amount of federal, state and local income taxes on such Total
Benefits, and (B) the amount of excise tax to which the Employee would be
subject in respect of such unreduced Total Benefits.

 

(c)       For purposes of this paragraph 6, a “Change of Control” shall be
deemed to have occurred if:

 

(i)       any “person,” including a “group” as determined in accordance with the
Section 13(d)(3) of the Securities Exchange Act of 1934 (“Exchange Act”), is or
becomes the beneficial owner, directly or indirectly, of securities of Employer
representing 30% or more of the combined voting power of Employer’s then
outstanding securities;

 

(ii)       as a result of, or in connection with, any tender offer or exchange
offer, merger or other business combination (a “Transaction”), the persons who
were directors of Employer before the Transaction shall cease to constitute a
majority of the Board of Directors of Employer or any successor to Employer;

 

(iii)       Employer is merged or consolidated with another corporation and as a
result of the merger or consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall then be owned in the
aggregate by the former stockholders of Employer, other than (A) affiliates
within the meaning of the Exchange Act, or (B) any party to the merger or
consolidation;

 

(iv)       a tender offer or exchange offer is made and consummated for the
ownership of securities of Employer representing 30% or more of the combined
voting power of Employer’s then outstanding voting securities; or

 

(v)       Employer transfers substantially all of its assets to another
corporation, which is not controlled by Employer.

 

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(d)       For purposes of this paragraph 6, “good reason” shall mean action
taken by Employer that results in:

 

(i)An involuntary and material adverse change in Employee’s authority, duties,
responsibilities, or base compensation;

 

(ii)An involuntary and material relocation of the office from which Employee is
expected to perform his duties; or

 

(iii)A material breach of this Agreement.

 

In all cases, Employee must provide notice to Employer of the existence of a
condition described in (i), (ii) or (iii) above within 30 days of the initial
existence of the condition, upon the notice of which Employer shall have 30 days
thereafter (the “remedy period”) in which to remedy the condition (and not be
required to pay or provide the severance benefit described in this Section 6).
If the “good reason” condition is not remedied within the 30-day remedy period,
Employee shall receive the severance benefit described in this Section 6 only if
Employee terminates employment within ten business days following the expiration
of the 30-day remedy period.

 

7.       Withholding. Employer shall deduct and withhold from compensation and
benefits provided under this Agreement all necessary income and employment taxes
and any other similar sums required by law to be withheld.

 

8.       Covenants.

 

(a)       Confidentiality. Employee shall not, without the prior written consent
of Employer, disclose or use in any way, either during his employment by
Employer or thereafter, except as required in the course of his employment by
Employer, any confidential business or technical information or trade secret
acquired in the course of Employee’s employment by Employer. Employee
acknowledges and agrees that it would be difficult to fully compensate Employer
for damages resulting from the breach or threatened breach of the foregoing
provision and, accordingly, that Employer shall be entitled to temporary
preliminary injunctions and permanent injunctions to enforce such provision.
This provision with respect to injunctive relief shall not, however, diminish
Employer’s right to claim and recover damages. Employee covenants to use his
best efforts to prevent the publication or disclosure of any trade secret or any
confidential information that is not in the public domain concerning the
business or finances of Employer or Employer’s affiliates, or any of its or
their dealings, transactions or affairs which may come to Employee’s knowledge
in the pursuance of his duties or employment.

 

(b)       No Competition. Employee’s employment is subject to the condition that
during the term of his employment hereunder and for the period specified in
paragraph 8(c) below, Employee shall not directly or indirectly, own, manage,
operate, control or participate in the ownership, management, operation or
control of, or be connected as an officer, employee, partner, director,
individual proprietor, lender, consultant or otherwise with, or have any
financial interest in, or aid or assist anyone else in the conduct of, any
entity or business (a “Competitive Operation”) which competes in the banking
industry or with any other business conducted by Employer or by any group,
affiliate, division or subsidiary of Employer, in the same counties of New York,
Pennsylvania or any other state in which the Employer or any such group,
affiliate, division or subsidiary conducts business. Employee shall keep
Employer fully advised as to any activity, interest, or investment Employee may
have in any way related to the banking industry. It is understood and agreed
that, for the purposes of the foregoing provisions of this paragraph, (i) no
business shall be deemed to be a business conducted by Employer or any group,
division, affiliate or subsidiary of Employer unless 5% or more of Employer’s
consolidated gross sales or operating revenues is derived from, or 5% or more of
Employer’s consolidated assets are devoted to, such business; (ii) no business
conducted by any entity by which Employee is employed or in which he is
interested or with which he is connected or associated shall be deemed
competitive with any business conducted by Employer or any group, division,
affiliate or subsidiary of Employer unless it is one from which 2% or more of
its consolidated gross sales or operating revenues is derived, or to which 2% or
more of its consolidated assets are devoted; and (iii) no business which is
conducted by Employer on the date of Employee’s termination and which
subsequently is sold by Employer shall, after such sale, be deemed to be a
Competitive Operation within the meaning of this paragraph. Ownership of not
more than 5% of the voting stock of any publicly held corporation shall not
constitute a violation of this paragraph.

 

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(c) Non-Competition Period. The “non-competition period” shall begin on January
1, 2019 and shall end 12 months after the Employee’s termination of employment;
provided, however, that the non-competition period shall end on the date
Employee’s employment ends in the event of Employee’s termination for “good
reason” (as defined in paragraph 6(d)), or Employee’s termination without cause
(as defined in paragraph 3(d)).

 

(d)       Non-Solicitation. While Employee is employed by Employer, and for a
period of two years after Employee's employment with Employer ends for any
reason, Employee shall not directly or indirectly solicit (other than on behalf
of Employer) business or contracts for any products or services of the type
provided, developed or under development by Employer during Employee’s
employment by Employer, from or with (x) any person or entity which was a
customer of Employer for such products or services as of, or within 12 months
prior to, the date of Employee’s termination of employment with Employer, or (y)
any prospective customer which Employer was soliciting as of, or within 12
months prior to, Employee’s termination. Additionally, while Employee is
employed by Employer, and for two years after Employee’s employment with the
Employer ends for any reason, Employee will not directly or indirectly contract
with any such customer or prospective customer for any product or service of the
type provided, developed or which was under development by Employer during
Employee’s employment with Employer. Employee will not at any time knowingly
interfere or attempt to interfere with any transaction, agreement or business
relationship in which Employer was involved or was contemplating during
Employee’s employment with Employer, including but not limited to relationships
with customers, prospective customers, agents, contractors, vendors, service
providers, and suppliers.

 

(e)       Non-Recruitment. While Employee is employed by Employer, and for a
period of two years after Employee’s employment with Employer ends for any
reason, Employee shall not, directly or indirectly, solicit, recruit, or hire,
or in any manner assist in the hiring, solicitation or recruitment of any of
individual who is or was an employee of Employer, or who otherwise provided
services to Employer, within 12 months prior to the termination of Employee’s
employment with Employer.

 

(f)       Termination of Payments. Upon the breach by Employee of any covenant
under this paragraph 8, Employer shall cease all payments to Employee and may
offset and/or recover from Employee immediately any and all amounts payable to
Employee under this Agreement against any damages to which Employer is legally
entitled in addition to any and all other remedies available to Employer under
the law or in equity.

 

9.       Notices. Any notice which may be given hereunder shall be sufficient if
in writing and mailed by overnight mail, or by certified mail, return receipt
requested, to Employee at his residence and to Employer at 5790 Widewaters
Parkway, Dewitt, New York 13214, or at such other addresses as either Employee
or Employer may, by similar notice, designate.

 

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10.       Rules, Regulations and Policies. Employee shall abide by and comply in
all material respects with all of the rules, regulations, and policies of
Employer that may be in effect and amended from time to time, including without
limitation (i) Employer’s policy of strict adherence to, and compliance with,
any and all requirements of the banking, securities, and antitrust laws and
regulations, (ii) Employer’s human resources, personnel and benefits policies,
and (iii) to the extent applicable, Employer’s Executive Equity Ownership
Guidelines and claw-back policy.

 

11.       No Prior Restrictions. Employee affirms and represents that Employee
is under no obligations to any former employer or other third party which is in
any way inconsistent with, or which imposes any restriction upon, the employment
of Employee by Employer, or Employee’s undertakings under this Agreement.

 

12.       Return of Employer’s Property. After Employee has received notice of
termination or at the end of the term hereof, whichever first occurs, Employee
shall promptly return to Employer all documents and other property in his
possession belonging to Employer.

 

13.       Construction and Severability. The invalidity of any one or more
provisions of this Agreement or any part thereof, all of which are inserted
conditionally upon their being valid in law, shall not affect the validity of
any other provisions to this Agreement; and, in the event that one or more
provisions contained herein shall be invalid, as determined by a court of
competent jurisdiction, the court shall have authority to modify such provision
in a manner that most closely reflects the intent of the parties and is valid.
This Agreement shall be interpreted and applied in all circumstances in a manner
that is consistent with the intent of the parties that amounts earned and
payable pursuant to this Agreement shall not be subject to the premature income
recognition or adverse tax provisions of Internal Revenue Code Section 409A.
Accordingly, by way of example and not limitation, (a) distributions of benefits
payable following Employee’s termination of employment shall commence as of the
date required by this Agreement or, if later, the earliest date permitted by
Internal Revenue Code Section 409A (generally six months after termination, if
Employee is a “specified employee” within the meaning of Internal Revenue Code
Section 409A), and (b) the phrase “termination of employment” (and similar terms
and phrases) shall be construed to mean “separation from service” within the
meaning of Internal Revenue Code Section 409A.

 

14.       Governing Law. This Agreement was executed and delivered in New York
and shall be construed and governed in accordance with the laws of the State of
New York.

 

15.       Assignability and Successors. This Agreement may not be assigned by
Employee or Employer, except that this Agreement shall be binding upon and shall
inure to the benefit of the successor of Employer through merger or corporate
reorganization. Any attempted assignment in violation of this paragraph 15 shall
be null and void.

 

16.       Miscellaneous. This Agreement constitutes the entire understanding and
agreement between the parties with respect to the subject matter hereof and
shall supersede all prior understandings and agreements, including the
Employment Agreement between the parties that is scheduled to expire effective
December 31, 2018. This Agreement cannot be amended, modified, or supplemented
in any respect, except by a subsequent written agreement entered into by the
parties hereto. The services to be performed by Employee are special and unique;
it is agreed that any breach of this Agreement by Employee shall entitle
Employer (or any successor or assigns of Employer), in addition to any other
legal remedies available to it, to apply to any court of competent jurisdiction
to enjoin such breach. The provisions of paragraphs 3(e), 6 and 8 hereof shall
survive the termination of this Agreement.

 

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17.       Counterparts. This Agreement may be executed in counterparts (each of
which need not be executed by each of the parties), which together shall
constitute one and the same instrument.

 

18.       Jurisdiction, Venue and Fees. The jurisdiction of any proceeding
between the parties arising out of, or with respect to, this Agreement shall be
in a court of competent jurisdiction in New York State, and venue shall be in
Onondaga County. Each party shall be subject to the personal jurisdiction of the
courts of New York State. If Employee is the prevailing party in a proceeding to
collect payments due pursuant to this Agreement, Employer shall reimburse
Employee for reasonable attorneys’ fees incurred by Employee in connection with
such proceeding. Reimbursement shall be made on or before the last day of
Employee’s taxable year following the taxable year in which the expense was
incurred. The foregoing right of reimbursement shall expire on the fifth
anniversary of Employee’s separation of employment with Employer.

 

[Signature page follows.]

 

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The foregoing is established by the following signatures of the parties on
January 4, 2019.

 

  COMMUNITY BANK SYSTEM, INC.               By: /s/ Mark E. Tryniski        
Its: President and Chief Executive Officer               COMMUNITY BANK, N.A.  
            By: /s/ Bernadette R. Barber         Its: SVP & Chief Human
Resources Officer                     /s/ Joseph F. Serbun   JOSEPH F. SERBUN

 

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