Exhibit 10.9
EMPLOYMENT AGREEMENT

This sets forth the terms of the Employment Agreement made effective as of
August 1, 2004, and amended as of December 31, 2008 between (i) COMMUNITY BANK
SYSTEM, INC., a Delaware corporation and registered bank holding company, and
COMMUNITY BANK, N.A., a national banking association, both having offices
located in Dewitt, New York (collectively, the "Employer"), and (ii) BRIAN D.
DONAHUE, an individual currently residing at Olean, New York ("Employee").  This
Agreement is effective as of August 1, 2004 and supersedes the Employment
Agreement between the parties dated September 1, 2002.  This Agreement was
amended December 31, 2008 in accordance with Internal Revenue Code Section 409A.

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 employ Employee, and Employee shall serve,
as Chief Banking Officer and Executive Vice President of Employer for a term
commencing on August 1, 2004 and ending on December 31, 2009 ("Period of
Employment"), subject to termination as provided in paragraph 3 hereof.
(b)           Salary.  During the period August 1, 2004 through December 31,
2004, Employer shall pay Employee base salary at the annual rate of $200,000.00
("Base Salary").  For calendar year 2005, Employer shall pay Employee Base
Salary at the annual rate of $230,000.00.  Employee's Base Salary for calendar
years after 2005 shall be determined by the Board of Directors of Employer
("Board"), or an authorized committee of the Board, in accordance with
Employer's regular practice for reviewing and adjusting base salary for
executive employees.  Employee's Base Salary is payable in accordance with
Employer's regular payroll practices for executive employees.
(c)           Incentive Compensation.  Employee shall be entitled to annual
incentive compensation opportunities pursuant to the terms of the "Management
Incentive Plan" (which term includes any successor plan or incentive
compensation arrangement) which has been approved by the Board to cover Employee
and other key personnel of Employer.  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 award that is payable
with respect to the year during which the termination occurs or, in the case of
a termination upon Employee's disability pursuant to subparagraph 3(c), the date
the Disability Period began.
(d)           Until such time as Employee relocates his principal residence to
the Syracuse, New York area, which relocation shall occur by a date to be agreed
upon by the parties (but in no event shall such date be earlier than January 1,
2009), Employee shall be entitled to perform his services for Employer from
offices in Dewitt, New York and Olean, New York.  After such mutually
agreed-upon date, Employee shall perform his services for Employer from an
office in Dewitt, New York.
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 banking business and operations, and the discharge of such
other duties and responsibilities to Employer as may from time to time be
reasonably assigned to Employee by the Board or Employer's President and Chief
Executive Officer.  Employee shall report to the President and Chief Executive
Officer of Employer or the President and Chief Executive Officer's
designee.  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 and civic organizations.  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 as a Director of Employer.
 
 
 

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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.  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 the Beneficiary to purchase the balance of Community Bank
System, Inc. ("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 Employee's duties hereunder by reason of
physical or mental illness or injury for a period of 26 successive weeks, or
such longer waiting/elimination period provided pursuant to Employer's group
long-term disability policy (the "Disability Period") shall constitute
disability.  The determination of disability shall be made by a majority vote of
a physician selected by Employer, a physician selected by Employee and a third
physician selected by the other two physicians.  During the Disability Period,
Employee shall be entitled to 100% of Employee's Base Salary otherwise payable
during that period, reduced by any other 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, worker's compensation law, or any other benefit program or
arrangement).  Thereafter, upon termination pursuant to this disability
provision, 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.
(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)           Material breach of this Agreement;
(ii)           Documented misconduct as an executive of Employer, or any
subsidiary or affiliate of Employer for which Employee is performing services
hereunder including, but not limited to, misappropriating any funds or property
of any such company, or attempting to obtain any personal profit (A) from any
transaction to which such company is a party or (B) from any transaction with
any third party in which Employee has an interest which is adverse to the
interest of any such company, unless, in either case, Employee shall have first
obtained the written consent of the Board;
(iii)           Unreasonable neglect or refusal to perform the duties assigned
to Employee under or pursuant to this Agreement, unless cured within 60 days
following Employee's receipt of written notice to Employee of such neglect or
refusal;
(iv)           Conviction of a crime involving moral turpitude;
(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 and material failure to follow the reasonable, written
instructions of the Board or the President and Chief Executive Officer of
Employer or authorized designee, provided that the instructions do not require
Employee to engage in unlawful conduct; or
(vii)           Any material and documented violation of the rules or
regulations of the Office of the Comptroller of the Currency or of any other
regulatory agency. 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.
 
 
 

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(e)           Termination For Reasons Other Than Cause.  In the event Employer
terminates Employee prior to December 31, 2009 for reasons other than cause,
Employee shall be entitled to a severance benefit equal to the greater of (i)
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.
In addition, Employer shall: (iii) permit Employee to dispose of any restricted
stock granted to Employee; 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, if Employer terminates Employee for reasons other
than cause and under circumstances that entitle Employee to payments and
benefits under paragraph 6 of this Agreement (regarding “Change of Control”)
then 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).
(f)           Expiration of Term Without Renewal.  In the event that Employee's
employment ends on December 31, 2009 solely because Employer chooses not to
renew or extend this Agreement beyond December 31, 2009 for reasons other than
cause, then Employee shall be entitled to a severance benefit equal to the sum
of (i) 175 percent of the annual Base Salary in effect at the time of
termination, and (ii) the most recent payment to Employee under the Management
Incentive Plan.  The benefit payable under this paragraph 3(f) shall be reduced
by any amounts payable to Employee under paragraphs 6(a)(i) and (ii).  Any
remaining benefit described in this paragraph 3(f) shall be paid on or before
March 15, 2010.
(g)           Employer shall have the right of first refusal to purchase from
Employee, or from Employee's beneficiary or estate, shares of CBSI Stock (but
not outstanding options) acquired pursuant to the exercise of stock options
after the date of Employee's termination of employment for any reason, in the
event Employee, or Employee's beneficiary or estate, elects to dispose or
transfer such acquired shares.  Any purchase made pursuant to this subparagraph
shall be made at a price per share equal to the closing price per share of CBSI
Stock (on the principal public market on which CBSI Stock is traded; currently
the New York Stock Exchange) on the trading day that immediately precedes the
date of purchase.  The right of first refusal described in this subparagraph
shall expire ten years from the date of Employee's termination of employment.
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 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 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 for review on a quarterly
basis.
 
 
 

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(c)           Other Benefits.  During the Period of Employment, Employee also
shall be entitled to receive the following benefits:
(i)           Paid vacation of four weeks during each calendar year (with no
carry over 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)           Employer paid memberships for Employee at a golf club and a
social club, subject to the approval of the President and Chief Executive
Officer of Employer and subject to nondeductible tax treatment by Employer or a
reimbursement to Employee for taxes owed by Employee in connection with such
benefit;
(iv)           Reimbursement of the purchase price of a cellular telephone and
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).
(d)           Supplemental Retirement Benefits.  The terms and conditions for
the payment of supplemental retirement benefits shall be set forth in a separate
written agreement between the parties.
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. 2004 Long-Term Incentive Compensation
Program, 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 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
described in paragraph 3(d) or Employee’s voluntary termination without “good
reason”, within two years following a “Change of Control” 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 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 a single lump-sum payment
within 60 days following Employee’s termination.  If Employee is a “specified
employee” (as determined in accordance with Internal Revenue Code Section 409A),
then the single lump-sum payment shall be made on the first day of the seventh
month following Employee’s termination.
(ii)           Subject to the applicable limitations of Internal Revenue Code
Section 409A that apply if Employee is a “specified employee” (as determine 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-six (36)
months following Employee’s termination.  To the extent the benefits provided to
Employee in this paragraph 6(a)(ii) are deemed taxable benefits, Employer shall
reimburse Employee for taxes owed by Employee on the benefits and tax
reimbursement.  The reimbursement shall be made by the end of Employee’s taxable
year next following the taxable year in which Employee remits the related taxes.
(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.
(iv)           Employer shall waive all restriction on any shares restricted
stock granted to Employee and permit Employee to dispose of such stock.
(v)           Employer shall pay to Employee the difference between 94% of the
market value of Employee's principle residence at the time of termination and
the proceeds of the sale of such home by Employee following his termination of
employment not later than twelve months following such termination, if Employee
elects to move outside of the general geographic area of his principle residence
at the time of termination to take other employment.  Employee must establish
that Employee was unable, despite reasonable efforts, to sell the home for a sum
equal to the market value, and Employer reserves the right to purchase the home
for a sum equal to 94% of the established market value.  For the purposes of
this subparagraph 6(a)(v), the market value of the principle residence shall be
established by averaging the values established by two independent
appraisals.  If the two appraisals differ by more than 5%, a third appraisal
shall be secured and the value shall be established by averaging the value of
the three appraisals.  Market value shall be the greater of (A) market value
determined by the appraisal and averaging process described above as of the date
of Employee’s termination of employment, or (B) market value determined by the
appraisal and averaging process described above as of the date the sale is
consummated.
 
 
 

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(b)           Notwithstanding any provision of this Agreement to the contrary,
and except as provided in the last sentence of this paragraph 6(b), 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.  Notwithstanding the
foregoing, and although Employee shall not have a legally binding right to any
such payment, the Board of Directors of Employer shall have the sole discretion
to waive the limitations described in this paragraph 6(b) and/or to increase the
amounts payable pursuant to this paragraph 6 to help cover some or all of the
taxes payable by Employee as a result of the receipt of unreduced payments and
benefits pursuant to this Agreement.
(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 or the board of directors of 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.
(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 title,
duties, responsibilities, or total remuneration;
(ii)           An involuntary and material relocation of the office from which
Employee is expected to perform his duties; or
(iii)           An involuntary and material adverse change in the general
working conditions (including travel requirements and clerical support)
applicable to Employee.
By way of example, and not limitation, the following changes, if involuntary,
would constitute "good reason" for purposes of this Agreement: (A) reducing or
eliminating Employee's authority and responsibility to implement the duties of
Chief Banking Officer as described in paragraph 2; and (B) requiring Employee to
perform his services for Employer at an office located outside of Onondaga
County and Cattaraugus County, New York prior to Employee's relocation to the
Syracuse, New York area pursuant to subparagraph 1(d) or outside of Onondaga
County, New York after such relocation.
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 such disclosure or use and, accordingly, that
Employer shall be entitled to temporary preliminary injunctions and permanent
injunctions to enforce this 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
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.
 
 
 

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(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 states of New York and
Pennsylvania.  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 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 at the Date of 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.
(c)           Non-Competition Period. If Employee's employment with Employer
shall cease for any reason during the Period of Employment as defined in
paragraph 1(a) of this Agreement, the "non-competition period" shall begin on
the date the first payment is made pursuant to the terms of this Agreement and
shall end on the date the final payment is made pursuant to the terms of this
Agreement; 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(e)), or Employee's termination without cause
(as defined in paragraph 3(d)), within two years following a Change of Control
that occurs during the Period of Employment.
(d)           Certain Affiliates of Employer.  It is understood that Employee
may have access to technical knowledge, trade secrets and customer lists of
affiliates of Employer or companies which Employer's parent may acquire in the
future and may serve as a member of the board of directors or as an officer or
employee of an affiliate of Employer.  Employee covenants that he shall not,
during the term of his employment by Employer or for the period specified in
8(c) above, in any way, 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 aid or assist anyone else in any business or
operation which competes with or engages in the business of such an affiliate.
(e)           Termination of Payments.  Upon Employee's receipt of written
notice to Employee of the breach by Employee of any covenant under this
paragraph 8, Employer may offset and/or recover from Employee immediately any
and all amounts paid to Employee under this Agreement 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 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.
10.           Rules, Regulations and Policies.  Employee shall abide by and
comply with all of the rules, regulations, and policies of Employer, including
without limitation Employer's policy of strict adherence to, and compliance
with, any and all requirements of the banking, securities, and antitrust laws
and regulations.
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, notwithstanding any other term or provision of this
Agreement to the contrary, distribution 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).
 
 
 

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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.
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 Change of Control Agreement between the parties that is scheduled
to expire effective December 31, 2005.  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 6
and 8 hereof shall survive the termination of this Agreement.
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.
The foregoing is established by the following signatures of the parties.

COMMUNITY BANK SYSTEM, INC.

By:___/s/ Mark E. Tryniski_______

Its:___President and CEO________

COMMUNITY BANK, N.A.

By:__/s/ Bernadette R. Barber____

Its:    Senior Vice President, Chief HR Officer

_____/s/ Brian D. Donahue______
BRIAN D. DONAHUE

 
 

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