<PAGE>

                                                                    Exhibit 10.3
                                                                    ------------

                             EMPLOYMENT AGREEMENT
                             --------------------

                  This sets forth the Employment Agreement made effective as of
_______________, 2001 between (i) COMMUNITY BANK SYSTEM, INC., a Delaware
corporation and registered bank holding company, and COMMUNITY BANK, N.A. (the
"Bank"), a national banking association, both having offices located in
___________ (collectively, the "Employer"), and (ii) STEVEN R. TOKACH, an
individual currently residing in ________________, Pennsylvania ("Employee").

                                  WITNESSETH
                                  ----------

                  WHEREAS, pursuant to an Agreement and Plan of Merger between
Community Bank System, Inc. (the "Corporation") and First Liberty Bank Corp.
(the "Seller"), dated November 29, 2000 (the "Agreement and Plan of Merger"),
the Corporation and the Seller have agreed to a merger (the "Merger") of the
Seller with the Corporation effective as of the closing date specified in the
Agreement and Plan of Merger (the "Closing Date") and a merger of First Liberty
Bank & Trust, a wholly-owned subsidiary of the Seller ("First Liberty Bank"),
with the Bank; and

                  WHEREAS, the Employee is presently a party to an amended and
restated employment agreement dated October 25, 2000 (the "First Liberty
Employment Agreement") with First Liberty Bank; and

                  WHEREAS, in connection with the Merger, the Employee would be
entitled to resign and receive the benefits and payments provided for under
Section 6 of the First Liberty Employment Agreement; and

                  WHEREAS, the Employer wishes to employ the Employee to secure
for itself the services of the Employee for a period following the Closing Date;
and

                  WHEREAS, the Employee is willing to defer receipt of the
benefits and payments provided for under Section 6 of the First Liberty
Employment Agreement and accept employment with the Employer on the terms and
conditions hereinafter set forth.

                  NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>

     1.       Employment.
              ----------

              (a) Term. Employer shall continue to employ Employee, and Employee
                  ----
shall continue to serve for a term commencing on the Closing Date and ending on
the day immediately preceding the third anniversary date of the Closing Date
("Period of Employment"), subject to termination as provided in Paragraph 3
hereof.

              (b) Salary. During the Period of Employment, Employer shall pay
                  ------
Employee base salary at an annual rate of One Hundred Sixty-Five Thousand
Dollars ($165,000) ("Base Salary"). Employer agrees to review the performance of
the Employee on a periodic basis, and may increase the Base Salary provided
above, upon approval of the Board of Directors of the Employer. Any increase in
the Base Salary granted shall become part of the Base Salary, and shall remain
in effect throughout the term of this Agreement. 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 awards pursuant to the terms of the Management Incentive Plan which
has been approved by the Board of Directors of Employer to cover key personnel
of Employer. Upon termination of Employee's employment pursuant to subparagraph
3(a), 3(b), 3(c) or 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.

     2.       Duties During the Period of Employment. Employer shall employ
              --------------------------------------
Employee, and Employee shall serve in such executive and managerial capacities
and shall have such responsibilities, duties and authority as may, from time to
time, be assigned to Employee by and under the authority or delegated authority
of the Board of Directors of the Employer. Employee shall be employed as and
shall have the title of President and Chief Executive Officer of the division of
the Bank operating in the market areas in Pennsylvania previously served by
First Liberty Bank. In addition, Employee agrees to render such services and
perform such other duties for and on behalf of any subsidiary or affiliated
entity of the Employee as may be requested from time to time by the Board of
Directors of the Employer. In his employment, Employee agrees to discharge his
duties to the best of his abilities and to devote his full time and

                                       2
<PAGE>

attention to the business and affairs of the Employer at its offices of
business. Employee shall not be required to relocate the principal place of
performance of his duties under this Agreement beyond a radius of fifty (50)
miles from Scranton, Pennsylvania.

     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 Employer'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 (i) 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 and (ii) shall pay to such designated beneficiary within thirty (30)
days of such termination the severance amount provided for in paragraph 9.
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 held by Employee that are
not exercisable or that have not been exercised, so as to permit the Beneficiary
to purchase the balance of Corporation capital stock not yet purchased pursuant
to said options until the end of the exercise period provided in the original
grant of the option right.

              (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 (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

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<PAGE>

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, workers'
compensation law, or any other benefit program or arrangement). Upon termination
pursuant to this disability provision, (i) Employer shall pay to Employee within
thirty (30) days of such termination the severance amount provided for in
paragraph 9 and (ii) Employee shall be free to dispose of any restricted stock
granted to Employee. Additionally, Employer shall 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 the Employee to
purchase the balance of Corporation's capital stock not yet purchased pursuant
to said options until the end of the exercise period provided in the original
grant of the option right.

              (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 or director 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 (x) from any transaction to which such
     company is a party or (y) 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 of Directors of Employer;

                  (iii) Unreasonable neglect or refusal to perform the duties
     assigned to Employee under or pursuant to this Agreement, unless cured
     within 60 days;

                  (iv)  Conviction of a crime involving moral turpitude;

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<PAGE>

                  (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, provided that the
     instructions do not require Employee to engage in unlawful conduct; or

                  (vii)  Any 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; and further provided, however, that Employer shall in all events
pay to Employee within thirty (30) days of such termination the severance amount
provided for in paragraph 9 and provide to Employee the other benefits provided
in paragraph 9.

              (e) Termination For Reasons Other Than Cause. In the event
                  ----------------------------------------
Employer terminates Employee prior to the end of the Period of Employment for
reasons other than cause, Employee shall be entitled to severance 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 payable through the balance of the unexpired
term of this Agreement.

              (f) Employer shall have the right of first refusal to purchase
from Employee or Employee's estate, shares of Corporation capital stock acquired
pursuant to the exercise of stock options after date of termination, in the
event Employee or Employee's estate elects to dispose of or transfer such
acquired shares. Such right of first refusal shall expire ten years from the
date of termination.

     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

                                       5
<PAGE>

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. Reimbursable expenses must be
submitted to the President and CEO of Employer for review on a quarterly basis.

              (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 membership for Employee at the Glen Oak or
     Glen Maura Country Club, subject to nondeductible tax treatment by Employer
     or a reimbursement to Employee for taxes owed by Employee in connection
     with such benefit; and

                  (iv)  The use of an Employer-owned automobile of Employee's
     choice, the purchase and replacement of which shall be subject to the
     approval of the Personnel Committee of the Board of Directors of Employer.

                                       6
<PAGE>

     5.       Stock Options. Employer shall cause the Personnel Committee of the
              -------------
Board of Directors of Employer to review whether Employee should be granted
options to purchase shares of comon stock of Corporation. Such review may be
conducted pursuant to the terms of the Corporation's 1996 Long-Term Incentive
Compensation program or independently, as the Personnel 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 but not
including Employee's termination for "cause" (as described in paragraph 3(d)),
within two years following a Change of Control that occurs during the Period of
Employment, Employer shall:

                  (i)   Retain the services of Employee, on an independent
     contractor basis, as a consultant to Employer for a period of no less than
     36 months at an annual consulting fee rate equal to Employee's Base Salary
     in effect at the time of Employee's termination, plus an amount equal to
     the Management Incentive paid to the Employee in the year previous to the
     Change of Control;

                  (ii)  Provide Employee with fringe benefits, or the cash
     equivalent of such benefits, identical to those described in paragraph 4(a)
     for the period during which Employee is retained as a consultant pursuant
     to (i) above. To the extent the benefits provided to Employee in 6(a)(ii)
     above are deemed taxable benefits, Employer shall reimburse Employee for
     taxes owed by Employee on the benefits and tax reimbursement; and

                  (iii) Treat as immediately exercisable all unexpired stock
     options described in paragraph 5 that are not otherwise exercisable or that
     have not been exercised and permit Employee to dispose of any restricted
     stock granted to Employee.

                  (iv)  Subject to Employer's right to make the single lump sum
     payment described in paragraph 6(a)(v) below, if any portion of the amounts
     paid to, or value received by, Employee following a Change of Control
     (whether paid or received pursuant to this paragraph 6 or otherwise)
     constitutes an "excess parachute payment"

                                       7
<PAGE>

     within the meaning of Internal Revenue Code Section 280G, then the parties
     shall negotiate over the restructuring of payment dates and/or methods (but
     not payment amounts) to minimize or eliminate the application of Internal
     Revenue Code Section 280G. If an agreement between Employer and Employee to
     restructure payments cannot be reached within 60 days of the date the first
     payment is due under this paragraph 6, then payments shall be made without
     restructuring. Subject to paragraph 6(a)(v), Employee shall be responsible
     for all taxes and penalties payable by Employee as a result of Employee's
     receipt of an "excess parachute payment."

             (v) Notwithstanding the foregoing of this paragraph 6(a), the Board
     of Directors of Employer may elect, in its sole discretion, to pay all
     benefits due Employee pursuant to this paragraph 6 in a single lump sum
     payment within 90 days following a Change of Control and Employee's
     termination of employment with Employer. In the event a single lump sum
     payment is made pursuant to the foregoing sentence, the amount of the
     payment shall be increased to the extent necessary to hold Employee
     harmless from any tax liability attributable to such single lump sum
     payment.

         (b) As provided in paragraph 6(a) above, Employee may voluntarily
terminate his employment with Employer within two years following a Change of
Control, and receive all of the payments specified in 6(a) above. In the event
of such a voluntary termination, the payments specified in paragraph 6(a)(i)
shall be reduced by any non-Employer related wages or self-employment income
derived (or, in the case of a single lump sum payment, reasonably expected to be
derived) by Employee during the consulting period.

         (c) For purposes of 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

                                       8
<PAGE>

     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.

         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 concerning the business or finances of Employer or
Employer's affiliates, or an of its or their dealings, transactions or affairs
which may come to Employee's knowledge in the pursuance of his duties or
employment.

                                       9
<PAGE>

         (b) No Competition. Employee's employment is subject to the condition
             --------------
that during the term of his employment hereunder and for a period of 12 months
following the date of termination of his employment (the "Date of Termination"),
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 any area or market where such business is being conducted at the
Date of Termination. 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) 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 a period of 12 months
thereafter, 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

                                      10
<PAGE>

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.

         (d) Termination of Payments. Upon the breach by Employee of the
             -----------------------
confidentiality or nonsolicitation covenants under this paragraph 8, Employer
may offset and/or recover from Employee immediately any and all severance
benefits paid to Employee under paragraph 3(e) or 9 hereof in addition to any
and all other remedies available to Employer under the law or in equity.

         (e) The no competition provisions of paragraphs 8(b) and 8(c) shall not
apply if Employee's employment ceases within the two year period following a
Change of Control within the meaning of paragraph 6 or if the Employee's
employment terminates with or without cause. Notwithstanding the foregoing, in
the event that the Employee's employment terminates with or without cause (other
than within two years following a Change of Control), for a period of
twenty-four (24) months following such termination, Employee shall not, directly
or indirectly:

             (i)  solicit the sale of, or sell, any financial services or
     products, including but not limited to, any financial services or products
     similar to those offered by Employer or its affiliates, to any person, firm
     corporation, or enterprise who or which were customers or clients of
     Employer or its affiliates during the period of the Employee's employment;
     provided, however, that the foregoing restrictions shall not apply to (1)
     advertising, solicitations or marketing campaigns or other efforts
     undertaken by a subsequent employer of Employee not primarily directed to,
     or targeted at, such customers or clients, and (2) responses to unsolicited
     inquiries of such customers or clients; and

             (ii) solicit, offer employment to, or take any action intended or
     which would reasonably be expected to have the effect of causing any
     employee of Employer or any of its affiliates to terminate such employment
     or accept employment or become affiliated with, or provide services for
     compensation in any capacity whatsoever to, any entity that directly or
     indirectly competes with Employer or any affiliates in any market area in
     which any of them is still active,

                                      11
<PAGE>

     9.  First Liberty Employment Agreement Severance Benefits.
         -----------------------------------------------------

         (a) The Employer acknowledges that the Employee would be entitled to
certain severance payments and continuation of benefits under Section 6 of the
First Liberty Employment Agreement as a result of the Merger, which payments and
benefits the Employee has agreed to defer in connection with the Merger and the
execution of this Agreement. The Employer also acknowledges and agrees that, in
the event that the Employee's employment terminates at any time and for any
reason, including a termination for cause, (i) the Employer shall pay as
severance to the Employee, or his designated beneficiary, an amount equal to the
Employee's Base Salary in effect on the Closing Date multiplied by two (2), such
payment to be made to the Employee in a lump-sum within fifteen (15) days after
the date of termination and (ii) for a period of two (2) years following the
date of termination the Employee shall receive a continuation of all life,
disability, medical insurance and other normal benefits in effect at any time
during the two (2) years prior to his termination of employment, or if the
Employer cannot provide such benefits because the Employee is no longer an
employee, a dollar amount equal to the cost to the Employee of obtaining such
benefits (or substantially similar benefits). In the event that the payment and
benefits to be provided to the Employee, or his designated beneficiary, under
this paragraph 9 are duplicative of any payments and benefits to be provided to
the Employee under any other paragraph of this Agreement (including without
limitation, paragraph 3 or 6), such other payment shall be reduced and such
other benefits shall be eliminated to the extent, and only to the extent, of
such duplication. By way of an example, in the event that Employee's employment
hereunder shall terminate following the occurrence of a Change of Control and
Employee shall elect to receive payments and benefits under paragraph 6 of this
Agreement, then Employee (or his designated beneficiary) shall not be entitled
to receive any payments or benefits under this paragraph 9 in connection with
such termination.

         (b) The Employee shall not be required to mitigate the amount of any
payment or benefit provided for in this paragraph 9 by seeking employment or
otherwise. Except as otherwise provided in the penultimate sentence of paragraph
9(a) above, no amounts or benefits payable or to be provided to the Employee
under this paragraph 9 shall be reduced by or offset against any other amounts
paid or payable to, or received or to be received, by the Employee from any
source, including, without limitation, another employer.

                                      12
<PAGE>

     10. 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.

     11. Rules, Regulations and Policies. Employee shall abide by and comply in
         -------------------------------
all material respects with all of the rules, regulations, and policies of
Employer of which he has actual knowledge or he reasonably should have known,
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.

     12. No Prior Restrictions. Employee affirms and represents that Employee is
         ---------------------
under no obligation 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.

     13. 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 forthwith return to Employer all documents and other property in his
possession belonging to Employer.

     14. 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 contained herein shall be invalid, as determined by a court
of competent jurisdiction, this instrument shall be construed as if such invalid
provisions had not been inserted.

     15. 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.

     16. 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.

     17. Miscellaneous. This Agreement constitutes the entire understanding and
         -------------
agreement between the parties with respect to the subject matter hereof and
shall supersede all

                                      13
<PAGE>

prior understanding and agreements, including the First Liberty Employment
Agreement. 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, 8, 9, 10 and 13 hereof shall survive the
termination of this Agreement.

     18. 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.

     19. 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 the Commonwealth of Pennsylvania. If
Employee is a party in a proceeding to collect payments due pursuant to this
Agreement and prevails in collecting payments due in the proceeding or
settlement of the proceeding, Employer shall reimburse Employee for reasonable
attorneys' fees incurred by Employee in connection with such proceeding.

    The foregoing is established by the following signatures of the parties.

                                            COMMUNITY BANK SYSTEM, INC.

                                            By:
                                               ---------------------------------

                                            Attest:
                                                   -----------------------------


                                            COMMUNITY BANK, N.A.

                                            By:
                                               ---------------------------------

                                            Attest:
                                                   -----------------------------


                                                                          (SEAL)
                                            ------------------------------
                                                      ("Employee")

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