Exhibit 10.4

 

 

 

 

 

 

COMMUNITY BANK SYSTEM, INC.

 

RESTORATION PLAN

 

 

 

 

 

 

Effective as of June 1, 2018

 

 

 

 

COMMUNITY BANK SYSTEM, INC.

 

RESTORATION PLAN

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I   DEFINITIONS   2       ARTICLE II   ELIGIBILITY AND
PARTICIPATION   3       ARTICLE III   DEFERRED COMPENSATION BENEFIT   3      
ARTICLE IV   AMENDMENT AND TERMINATION   6       ARTICLE V   CLAIMS PROCEDURE  
7       ARTICLE VI   MISCELLANEOUS   8

 

 

EXHIBIT A - PARTICIPATION AGREEMENT

 

EXHIBIT B - BENEFICIARY DESIGNATION

 

 

 

 

COMMUNITY BANK SYSTEM, INC.

RESTORATION PLAN

 

PREAMBLE

 

The Board of Directors of Community Bank System, Inc. adopted this non-qualified
deferred compensation plan for a select group of management and highly
compensated employees of Community Bank, N.A. and participating affiliated
employers, to be effective as of June 1, 2018.

 

The general purpose of this Plan is to provide non-qualified deferred
compensation benefits to selected employees whose benefits under tax-qualified
retirement plans are restricted by the Internal Revenue Code Section 401(a)(17)
limitation on compensation that may be taken into account under tax-qualified
plans.

 

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ARTICLE I
DEFINITIONS

 

When used herein, the following words shall have the meanings set forth below,
unless the context clearly indicates otherwise:

 

1.01       Account shall mean the special unfunded bookkeeping account
maintained by or for a Participating Employer to record the interest of a
Participant in accordance with Article III.

 

1.02       Beneficiary shall mean the individual designated by a Participant in
accordance with Section 3.09 to receive the unpaid balance of the Participant’s
benefit under this Plan following the Participant’s death.

 

1.03       401(k) Plan shall mean the Community Bank System, Inc. 401(k)
Employee Stock Ownership Plan, as amended from time to time. To the extent
necessary to carry out the purposes of this Plan, the terms of the 401(k) Plan
are hereby incorporated by reference.

 

1.04       401(k) Plan Compensation shall mean “Compensation” as defined in the
401(k) Plan.

 

1.05       Participant shall mean a highly compensated or management employee of
a Participating Employer who satisfies the eligibility and participation
requirements of Article II.

 

1.06       Participating Employer shall mean Community Bank System, Inc.,
Community Bank, N.A., and any other affiliate or subsidiary of Community Bank
System, Inc. that adopts this Plan pursuant to Section 6.09.

 

1.07       Participation Agreement shall mean the written agreement between the
Participating Employer and a Participant, in the form attached as Exhibit A of
the Plan (or in such other form, including electronic form, as the Plan
Administrator shall determine), which sets forth such terms and conditions
determined by the Plan Administrator to be appropriate and consistent with the
terms and purposes of the Plan.

 

1.08       Pension Plan shall mean the Community Bank System, Inc. Pension Plan,
as amended from time to time. To the extent necessary to carry out the purposes
of this Plan, the terms of the Pension Plan are hereby incorporated by
reference.

 

1.09       Pension Plan Compensation shall mean “Compensation” as defined in the
Pension Plan.

 

1.10       Plan shall mean the Community Bank System, Inc. Restoration Plan, as
set forth in this document which may be amended from time to time.

 

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1.11       Plan Administrator shall mean the Senior Vice President and Chief
Human Resources Officer of Community Bank, N.A., or such other person or entity
designated by the Chief Executive Officer of Community Bank, N.A. to carry out
the administration of the Plan.

 

1.12       Plan Year shall mean the calendar year; provided that the first Plan
Year shall begin on June 1, 2018 and end on December 31, 2018.

 

 

ARTICLE II
ELIGIBILITY AND PARTICIPATION

 

2.01       Eligibility. An employee of a Participating Employer is eligible to
participate in this Plan if the employee: (a) is a management or highly
compensated employee of the Participating Employer, (b) is designated by the
Plan Administrator as an employee eligible to participate in this Plan, (c) has
his or her participation in the Plan approved by the Compensation Committee of
the Board of Directors of Community Bank System, Inc., and (d) enters into a
Participation Agreement with his or her Participating Employer.

 

2.02       Participation Agreements. An eligible employee shall become a Plan
Participant upon the later of (i) the date the employee executes a Participation
Agreement, or (ii) the eligibility date provided in such Participation
Agreement.

 

 

ARTICLE III
DEFERRED COMPENSATION BENEFIT

 

3.01       Accounts. Each Participating Employer shall maintain a separate
Account and other appropriate records for each of its employees who is a
Participant in this Plan. Accounts shall be credited (increased) and debited
(decreased) in accordance with this Article III.

 

3.02       Initial Restoration Credit. As of the effective date of a
Participant’s initial participation in the Plan, the Participant’s Participating
Employer shall credit the Participant’s Account with such initial
contribution/credit as may be designated in the Participant’s Participation
Agreement. Although not limited to such purpose, the primary purpose of an
initial restoration credit is to reflect restoration credits that might have
been made on behalf of the Participant if his or her participation in the Plan
was effective as of a date that is earlier than the date determined pursuant to
Section 2.02. Not all Participants will be entitled to an initial
contribution/credit and initial contribution/credit amounts (if any) need not be
uniform.

 

3.03       Annual Pension Restoration Credit. As of the close of each Plan Year,
the Participant’s Participating Employer shall credit the Participant’s Account
with an amount equal to the excess of (a), minus (b), where (a) and (b) are
defined as follows:

 

(a)       The amount of the “Service Credit” that would have been earned by the
Participant under the terms of the Pension Plan for the Participant’s service
during the Plan Year if the amount of the Participant’s Pension Plan
Compensation that is taken into account under the terms of the Pension Plan for
the Plan Year was not limited by Internal Revenue Code section 401(a)(17).

 

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(b)       The amount of the Service Credit actually earned by the Participant
under the terms of the Pension Plan for the Participant’s service during the
Plan Year.

 

3.04       Annual 401(k) Plan Restoration Credit. As of the close of each Plan
Year, the Participant’s Participating Employer shall credit the Participant’s
Account with an amount equal to the product of (a) 4.5 percent (0.045), times
(b) the portion of the Participant’s 401(k) Plan Compensation for the Plan Year
that exceeds the limitation imposed on 401(k) Plan Compensation pursuant to
Internal Revenue Code section 401(a)(17); provided, however, that a
Participant’s Account shall be credited in accordance with this Section 3.04
only if the Participant maintains (for the applicable Plan Year) an election to
make the maximum elective deferral contribution that the Participant is
permitted to make to the 401(k) Plan under Internal Revenue Code Section 402(g).

 

3.05       Earnings. As of the close of each Plan Year, the Participant’s
Account shall be increased by the product of (a) the total amount credited to
the Participant’s Account as of the last day of the Plan Year, times (b) the
discount rate applied by Community Bank System, Inc. (for financial statement
disclosure purposes) to determine the value of its aggregate liability under the
Pension Plan as of the first day of such Plan Year. (For example, the discount
rate to be used under this Plan to calculate the earnings credit to be applied
for the Plan Year ending December 31, 2019 shall be the discount rate applied by
Community Bank System, Inc. to determine the value of its aggregate liability
under the Pension Plan as of January 1, 2019.) Earnings for a Participant’s
first and last Plan Year of participation shall be prorated, based on the
Participant’s complete months of participation in such Plan Years.

 

3.06       Account Reduction. Notwithstanding any other term or provision of the
Plan (including, without limitation, Section 4.01), each Participant’s Account
balance under this Plan shall be reduced by such amount that the Plan
Administrator determines is payable to the Participant under the Pension Plan
and attributable to the Participant’s participation in this Plan. The reduction
described in the preceding sentence shall be applied as of the earlier of (a)
the date as of which benefits are first paid to or on behalf of the Participant
pursuant to the Pension Plan, or (b) the date as of which benefits are first
paid to or on behalf of the Participant pursuant to this Plan. In no event shall
a Participant be entitled to receive a benefit under this Plan that duplicates a
benefit that has been paid or will be paid under the Pension Plan.

 

3.07       Payments of Account Balances.

 

(a)       Amounts held in a Participant’s Account shall be paid or payments
shall commence on the last day of the month that follows (i) the month during
which the Participant separates from service with the Participating Employer, or
(ii) in the case of a “specified employee” (as defined in Internal Revenue Code
Section 409A), six months after the Participant’s separation from service with
the Participating Employer.

 

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(b)       Payments pursuant to this Section 3.07 shall be made in the number of
installments (one, three, five or eleven) designated by the Participant in the
Participant’s Participation Agreement, on or commencing on the date determined
pursuant to Section 3.07(a). The amount of each installment shall equal the
product of (i) the then current balance credited to the Participant’s Account
(including earnings), times (ii) a fraction, the numerator of which is one and
the denominator of which is the number of unpaid installments. Installment
payments due after the initial installment shall be paid on each applicable
annual anniversary of the initial payment date. For purposes of Internal Revenue
Code Section 409A, the right to receive installment payments pursuant to this
Plan shall be treated as a right to receive a series of separate and distinct
payments. Notwithstanding the foregoing payment terms, if a Participant dies
prior to the date the Participant’s Account balance has been paid in full, the
then current Account balance shall be increased for earnings through the date of
death and the adjusted Account balance shall be paid to the Beneficiary in a
single lump-sum payment within 90 days following the date of the Participant’s
death.

 

3.08       Cash-Out of Small Balances. If the balance of a Participant’s Account
is not greater than the applicable dollar amount in effect under Internal
Revenue Code Section 402(g)(1)(B) at the time a payment is due under the Plan,
payment of the entire amount may be accelerated for administrative convenience
as determined by the Plan Administrator in its sole discretion. An accelerated
payment pursuant to this Section shall be made only if the Plan Administrator’s
exercise of discretion is evidenced in writing, no later than the date of such
payment, and the payment results in the complete termination and liquidation of
the Participant’s interest in the Plan and in all other similar nonqualified
deferred compensation arrangements maintained by any Participating Employer (or
any affiliated company) in which the Participant has an interest.

 

3.09       Beneficiaries.

 

(a)       Payments of Plan benefits shall be made to the Participant if living,
and if not, to the Participant’s Beneficiary. A Participant may designate a
Beneficiary and a contingent Beneficiary upon becoming a Participant, and may
change such designations at any time, by filing with the Plan Administrator a
written designation in the form attached as Exhibit B (or in such other form,
including electronic form, as the Plan Administrator shall determine).

 

(b) If upon the death of a Participant no valid designation of a Beneficiary is
on file with the Plan Administrator, or the benefit is not claimed by any
Beneficiary within a reasonable period of time after the death of the
Participant, the benefit shall be paid in the following order of priority: (i)
the Participant’s surviving spouse; (ii) the Participant’s surviving children,
including adopted children, in equal shares; or (iii) the Participant’s estate.

 

3.10       Missing Participants. If by the 15th day of the sixth calendar month
following the date of a payment specified under the Plan, the Participating
Employer is unable to locate a Participant who is entitled to a benefit under
the Plan after the Participating Employer has made a diligent effort to locate
the Participant, the Participating Employer, in its sole and absolute
discretion, may forfeit the Participant’s benefit under the Plan, and no
Participating Employer shall have any further obligation under this Plan with
respect to that Participant.

 

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3.11       Forfeiture. Notwithstanding any other term or provision in the Plan,
a Participant shall immediately cease to be a participant in the Plan and shall
immediately forfeit his or her entire unpaid Account balance in the Plan, if the
Participant’s employment with a Participating Employer is terminated by the
Participating Employer for “cause.” For this purpose, “cause” shall mean any act
of dishonesty or fraud, acts of moral turpitude, or the commission of a felony.

 

 

ARTICLE IV
AMENDMENT AND TERMINATION

 

4.01       Amendment and Termination. Community Bank System, Inc. intends to
maintain the Plan until all benefit payments are made pursuant to the Plan.
However, Community Bank System, Inc. reserves the right to amend or terminate
the Plan at any time. Any such amendment or termination shall be made pursuant
to resolutions of the Board of Directors of Community Bank System, Inc. No
amendment or termination of the Plan shall directly or indirectly deprive any
Participant of any portion of any benefit which has accrued prior to the
effective date of the resolution amending or terminating the Plan. Any benefit
payments on account of the Plan termination shall be made in accordance with the
plan termination provisions of Internal Revenue Code Section 409A, as more fully
described in Sections 4.01(a) and (b) below. Notwithstanding any other provision
in the Plan to the contrary, the Plan shall terminate automatically upon the
final payment of all amounts payable hereunder.

 

(a)       If this Plan is terminated prior to, and not on account of, a change
in control (as defined in Internal Revenue Code Section 409A), then (i) all
agreements, methods, programs, and other arrangements sponsored by the affected
Participating Employer that would be aggregated under the plan aggregation rules
of Internal Revenue Code Section 409A (the “Aggregated Plans”) shall be
terminated and liquidated, (ii) all Participants shall receive all amounts of
compensation deferred under the terminated Plan and all Aggregated Plans after
12 months after the date the Participating Employer irrevocably takes all
necessary actions to terminate the Plan and all Aggregated Plans, other than
payments that would be payable under the terms of the Plan if the action to
terminate and liquidate the Plan had not occurred, (iii) all Participants shall
receive all amounts of compensation deferred under the terminated Plan and all
Aggregated Plans within 24 months after the date the Participating Employer
irrevocably takes all necessary actions to terminate the Plan and all Aggregated
Plans, and (iv) the Participating Employers may not adopt a new plan that would
be aggregated under the plan aggregation rules of Internal Revenue Code Section
409A within three years of the date the Participating Employer irrevocably takes
all necessary actions to terminate the Plan and all Aggregated Plans.

 

(b)       If this Plan is terminated on account of a change in control (as
defined in Internal Revenue Code Section 409A) within 30 days preceding or 12
months following the change in control, then (i) all Aggregated Plans
immediately after the change in control shall be terminated and liquidated with
respect to each Plan Participant who experienced the change in control, and (ii)
all affected Participants shall receive all amounts of compensation deferred
under the terminated Plan and all Aggregated Plans within 12 months of the date
the Participating Employer irrevocably takes all necessary action to terminate
the Plan and all Aggregated Plans.

 

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4.02       Successors. This Plan shall inure to the benefit of and be binding
upon the successors and assigns of each Participating Employer. Each
Participating Employer shall use its reasonable efforts to ensure that any
successor to such Participating Employer adopts, and agrees to be bound by, the
Plan.

 

 

ARTICLE V
CLAIMS PROCEDURE

 

5.01       Written Request. A Participant or Beneficiary seeking unpaid Plan
benefits must submit a written request for benefits to the Plan Administrator.

 

5.02       Notice of Denial. If a request for benefits is wholly or partially
denied, notice of the denial, prepared in accordance with Section 5.03, shall be
furnished to the claimant within a reasonable period of time, not to exceed 90
days, after receipt of the request by the Plan Administrator, unless special
circumstances require an extension of time for processing the request. If such
an extension of time is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial 90-day period.
In no event shall such extension exceed a period of 90 days from the end of such
initial period. The extension notice shall indicate the special circumstances
requiring an extension of time and the date on which the Plan Administrator
expects to render a decision.

 

5.03       Content of Notice. The Plan Administrator shall provide every
claimant whose request for benefits is denied a written notice setting forth, in
a manner calculated to be understood by the claimant, the following:

 

(a)       a specific reason or reasons for the denial;

 

(b)       specific references to the pertinent Plan provisions upon which the
denial is based;

 

(c)       a description of any additional material or information necessary for
the claimant to perfect the request and an explanation of why such material or
information is necessary; and

 

(d)       an explanation of the Plan’s review procedures (set forth below),
including the time limits applicable to such procedures and a statement of the
claimant’s right to commence a civil action under Section 502(a) of the Employee
Retirement Income Security Act following an adverse benefit determination on
review.

 

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5.04       Review Procedure. The purpose of the review procedure set forth in
this Section and Section 5.05 is to provide a procedure by which a claimant
under the Plan may have a reasonable opportunity to appeal a denial of a request
for benefits to the Plan Administrator for a full and fair review. To accomplish
that purpose, the claimant (or the claimant’s duly authorized representative)
may:

 

(a)       upon request, and free of charge, receive reasonable access to, and
copies of, all pertinent Plan documents, records, and other information relevant
to the claim; and

 

(b)       submit issues and comments in writing plus any documents, records or
other information relevant to the claim.

A claimant (or the claimant’s duly authorized representative) may request a
review of the denial of a claim for benefits by filing a written application for
review with the Plan Administrator at any time within 60 days after receipt by
the claimant of written notice of the denial of the claimant’s request for
benefits. The review will take into account all comments, documents, records,
and other information submitted by or on behalf of the claimant relating to the
claim, without regard to whether such information was submitted or considered in
the initial benefit determination.

 

5.05       Decision on Review. A decision on review of a denied request for
benefits shall be made in the following manner:

 

(a)       The decision on review shall be made by the Plan Administrator. The
Plan Administrator shall make a decision promptly, but not later than 60 days
after receipt of the request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be rendered as
soon as possible, but not later than 120 days after receipt of the request for
review. If such an extension of time for review is required, written notice of
the extension shall be furnished to the claimant prior to the commencement of
the extension.

 

(b)       The decision on review shall be in writing and shall be written in a
manner calculated to be understood by the claimant. If the benefit determination
is adverse, the notice will include: (i) the specific reason(s) for the adverse
determination; (ii) specific references to the pertinent Plan provisions upon
which the determination is based; (iii) a statement of the claimant’s right to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claim; and (iv) a
statement of the claimant’s right to bring an action under Section 502(a) of
ERISA.

 

 

ARTICLE VI
MISCELLANEOUS

 

6.01       No Effect on Employment Rights. Nothing contained in this Plan shall
confer upon any Participant the right to be retained in the service of any
Participating Employer nor limit the right of a Participating Employer to
discharge or otherwise deal with the Participant without regard to the existence
of the Plan.

 

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6.02       Funding.

 

(a)       The Plan, at all times, shall be entirely unfunded for income tax
purposes and for purposes of the Employee Retirement Income Security Act. No
provision shall be made at any time with respect to segregating any assets of
any Participating Employer for the payment of any benefits hereunder.

 

(b)       No Participant or Beneficiary shall have any interest in any
particular assets of any Participating Employer by reason of the right to
receive a benefit under this Plan, and any such Participant or Beneficiary shall
have only the rights of an unsecured general creditor solely of the
Participating Employer that employees or employed such Participant with respect
to any rights under the Plan.

 

(c)       Nothing contained in the Plan shall constitute a guarantee by any
Participating Employer or any entity or person that the assets of the
Participating Employer will be sufficient to pay any benefit hereunder. Further,
no Participating Employer shall have any liability or responsibility for the
payment of any benefits under this Plan to or on behalf of Participants who are
or were employed by any other Participating Employer.

 

(d)       Notwithstanding the foregoing of this Section 6.02, each Participating
Employer may establish or participate in a grantor trust (commonly referred to
as a “rabbi trust”) to provide the Participating Employer with a source of
assets to assist the Participating Employer in satisfying its liabilities under
this Plan. To the extent consistent with Internal Revenue Code Section 409A,
each Participating Employer shall contribute to the trust such cash and/or
property that the Participating Employer shall deem necessary and appropriate to
satisfy its obligations under this Plan. The establishment and maintenance of
the trust shall not affect the status of the Plan as an unfunded plan maintained
for the purpose of providing deferred compensation to a select group of the
management and highly compensated employees.

 

6.03       Withholding. Amounts credited, and benefit payments made, pursuant to
the Plan shall be subject to withholding for income, FICA and other employee
payroll and employment taxes, withholding taxes, or other similar taxes that the
Participating Employer may be required by law to withhold.

 

6.04       Spendthrift Provision. No benefit payable under this Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge prior to actual receipt thereof by the payee. Any
attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge prior to such receipt shall be void. No Participating Employer shall be
liable in any manner for or subject to the debts, contracts, liabilities, or
torts of any person entitled to any benefit under this Plan.

 

6.05       Administration.

 

(a)       The Plan Administrator shall be responsible for the general operation
and administration of the Plan and for carrying out its provisions.
Notwithstanding the foregoing sentence, the Plan Administrator may delegate to
employees of any Participating Employer responsibility for such administrative
duties as the Plan Administrator may deem necessary or appropriate. The Plan
Administrator also may engage such actuaries, accountants, record keepers,
counsel or other persons to perform such services with respect to the Plan as
the Plan Administrator may deem necessary or appropriate.

 

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(b)       The Plan Administrator shall have the authority and discretion to
construe, interpret and apply all the terms and provisions of the Plan,
including any uncertain or disputed terms or provisions of the Plan. All actions
and decisions of the Plan Administrator, including any exercise of the Plan
Administrator’s authority and discretion to construe, interpret and apply
uncertain or disputed terms or provisions of the Plan, shall be binding and
conclusive upon each Participating Employer, Participant, Beneficiary, and
claimant. All actions and decisions of the Plan Administrator shall be given
deference in all courts of law and no such action or decision shall be
overturned or set aside by any court of law unless found to be arbitrary and
capricious, or made in bad faith.

 

6.06       Disclosure. Each Participant shall be entitled to receive a copy of
the Plan.

 

6.07       Governing Law. The Plan is established under, and shall be governed
and construed according to, the laws of the State of New York, to the extent
such laws are not preempted by federal law. In addition, the Plan and each
Participation Agreement shall be interpreted and applied in all circumstances in
a manner that is consistent with the Participating Employers’ intentions that
the Plan satisfy the applicable requirements of Internal Revenue Code Section
409A and that amounts paid pursuant to the Plan shall not be subject to the
premature income tax recognition or adverse tax provisions of Internal Revenue
Code Section 409A. Accordingly, by way of example and not limitation, (a) 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, and (b) distributions of benefits payable following a
Participant’s termination of employment shall commence as of the date required
by the Plan or, if later, the earliest date permitted by Internal Revenue Code
Section 409A (generally six months after separation, if the Participant is a
“specified employee” within the meaning of Internal Revenue Code Section 409A).

 

6.08       Severability. If one or more provisions of the Plan, or any part
thereof, shall be determined by a court of competent jurisdiction to be invalid
or unenforceable, then the Plan shall be administered as if such invalid or
unenforceable provision had not been contained in the Plan. The invalidity or
unenforceability of any Plan provision, or any part thereof, shall not affect
the validity and enforceability of any other Plan provision or any part thereof.

 

6.09       Adoption of Plan by Affiliates. Any affiliate or subsidiary of
Community Bank System, Inc. may participate in this Plan, with the consent of
the Board of Directors of Community Bank System, Inc., provided that the
participating entity shall not have authority to amend the Plan. A participating
entity shall be deemed to have delegated authority to administer the Plan to the
Plan Administrator and shall execute such documents that the Plan Administrator
shall deem necessary or appropriate.

 

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Community Bank System, Inc. caused this Plan to be executed by its duly
authorized officer to be effective as of June 1, 2018.

 

Dated: May 21, 2018 COMMUNITY BANK SYSTEM, INC.               By:  /s/
Bernadette R. Barber       Bernadette R. Barber
Senior Vice President and Chief HR Officer

 

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