Exhibit 10.4

                              EMPLOYMENT AGREEMENT

      This sets forth the terms of the Employment Agreement made effective as of
September 1, 2002 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) JOSEPH J. LEMCHAK, an individual
currently residing at Syracuse, New York ("Employee").

                               W I T N E S S E T H

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

      1. Employment.

            (a) Term. Employer shall continue to employ Employee, and Employee
shall continue to serve, as Chief Investment Officer of Employer for a
forty-month term commencing on September 1, 2002 and ending on December 31, 2005
("Period of Employment"), subject to termination as provided in paragraph 3
hereof.

            (b) Salary. During the period of September 1, 2002 through December
31, 2002, Employer shall pay Employee base salary at the annual rate in effect
for Employee on August 31, 2002 ("Base Salary"). Employee's Base Salary for
calendar years after 2002 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


<PAGE>

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 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. Employee shall have full
responsibility, subject to the control of the Board and Employer's President and
Chief Executive Officer, for the supervision of all aspects of Employer's
investment 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.


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<PAGE>

      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 (the
"Disability Period") shall constitute disability. The determination of
disability shall be made by a physician selected by Employer and a physician


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<PAGE>

selected by Employee; provided, however, that if the two physicians so selected
shall disagree, the determination of disability shall be submitted to
arbitration in accordance with the rules of the American Arbitration Association
and the decision of the arbitrator shall be binding and conclusive on Employee
and Employer. During the Disability Period, Employee shall be entitled to 100%
of Employee's Base Salary otherwise payable during that period, reduced by 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). 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


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<PAGE>

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;

                  (iii) Unreasonable neglect or refusal to perform the duties
assigned to Employee under or pursuant to this Agreement, unless cured within 60
days following 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 failure to follow the reasonable, written
instructions of the Board or the President and Chief Executive Officer of
Employer, 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.

            (e) Termination For Reasons Other Than Cause. In the event Employer
terminates Employee prior to December 31, 2005 for reasons other than cause,
Employee shall be entitled to a severance benefit equal to the greater of (i)
the sum of the annual


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<PAGE>

Base Salary in effect at the time of termination and the most recent payment to
Employee under the Management Incentive Plan, payable in equal biweekly
installments over the 12-month period following Employee's termination, 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, payable in biweekly installments through the balance of the
unexpired term of this Agreement. 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.

            (f) Expiration of Term Without Renewal. In the event that Employee's
employment ends on December 31, 2005 solely because Employer chooses not to
renew or extend this Agreement beyond December 31, 2005 for reasons other than
cause, then Employee shall be entitled to a severance benefit equal to 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, payable in equal
biweekly installments over the 12-month period following Employee's termination
of employment.

            (g) Employer shall have the right of first refusal to purchase from
Employee, or from Employee's beneficiary or estate, shares of CBSI stock
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


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<PAGE>

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. Reimbursable expenses must be
submitted to the Personnel Committee of the Board for review on a quarterly
basis.


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<PAGE>

            (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; and

                  (ii) Reasonable sick leave.

      5. Stock Options. Employer shall cause the Personnel 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. 1994 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 for "good
reason" (as defined in paragraph 6(e) below), but not including Employee's
termination for "cause" (as described in paragraph 3(d)) or Employee's voluntary
termination without "good reason," within 2 years following a "Change of
Control" that occurs during the Period of Employment, Employer shall:

                  (i) Pay to Employee the greater of (A) 200% of the sum of the
annual Base Salary in effect at the time of termination and the most recent
payment to Employee under the Management Incentive Plan, payable in equal
biweekly installments over the 24-month period following Employee's termination,
or (B) amounts of Base Salary and expected Management Incentive Plan payments
that otherwise would have been payable through the


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<PAGE>

balance of the unexpired term of this Agreement, payable in biweekly
installments through the balance of the unexpired term of this Agreement;

                  (ii) Provide Employee with fringe benefits, or the cash
equivalent of such benefits (equal to Employer's cost for such benefits),
identical to those described in paragraph 4(a) for the period during which Base
Salary is payable to Employee pursuant to (i) above. 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;

                  (iii) 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); and

                  (iv) Permit Employee to dispose of any restricted stock
granted to Employee.

            (b) 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" within
the meaning of Internal Revenue Code Section 280G, then payments to Employee
pursuant to this Agreement shall be limited or modified to the extent necessary
to eliminate the application of Internal Revenue Code Section 280G.


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<PAGE>

            (c) Notwithstanding the foregoing of this paragraph 6, the Board may
elect, in its sole discretion, to pay all benefits due Employee pursuant to this
paragraph 6 in a single lump sum payment following a Change of Control and
Employee's termination of employment with Employer. Subject to the limitation
described in paragraph 6(b), 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 marginal income and
employment tax liability created by the single lump sum payment (i.e., the
income and employment tax liability that exceeds the income and employment tax
liability that would have been incurred by Employee if payments were made in the
manner and during the periods otherwise described in this paragraph 6).

            (d) 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


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<PAGE>

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.

            (e) 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 the Chief Investment Officer as described in paragraph 2; (B)
requiring Employee to perform his services for Employer at an office located
outside of Onondaga County, New York; and (C) reducing or eliminating Employee's
authority and responsibility to manage Employer's interest rate risk and
liquidity.


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<PAGE>

      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 any of its or their dealings, transactions or affairs
which may come to Employee's knowledge in the pursuance of his duties or
employment.

            (b) No Competition. Employee's employment is subject to the
condition that during the term of his employment hereunder and for the period
specified in paragraph 8(c) below, Employee shall not, directly or indirectly,
own, manage, operate, control or participate in the ownership, management,
operation or control of, or be connected as an officer, employee, partner,
director, individual proprietor, lender, consultant or otherwise with, or have
any financial interest in, or aid or assist anyone else in the conduct of, any
entity or business


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<PAGE>

(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.


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<PAGE>

            (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 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.


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<PAGE>

      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.

      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


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<PAGE>

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. Arbitration and Fees. Any dispute between the parties relating to the
terms of this Agreement, or any interpretation, construction or enforcement
hereof, shall first be submitted to non-binding arbitration in Syracuse, New
York in accordance with the rules and regulations of the American Arbitration
Association then in effect. Each party shall be responsible for its own costs
and expenses in pursuing non-binding arbitration, and any arbitration fees or
costs shall be shared equally between the parties. However, if Employee is a
party in an arbitration to collect payments due pursuant to this Agreement and
prevails in collecting payments due in the arbitration or settlement of the
arbitration, Employer shall reimburse Employee for reasonable attorneys' fees
incurred by Employee in connection with such arbitration.


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<PAGE>

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

                                                COMMUNITY BANK SYSTEM, INC.


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

                                                Its:
                                                    ----------------------------


                                                COMMUNITY BANK, N.A.


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

                                                Its:
                                                    ----------------------------


                                                --------------------------------
                                                       JOSEPH J. LEMCHAK


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<PAGE>

                                   APPENDIX A

                          BENEFICIARY DESIGNATION FORM

      Pursuant to the Employment Agreement between (i) Community Bank System,
Inc. and Community Bank, N.A., and (ii) Joseph J. Lemchak, dated as of September
1, 2002 ("Agreement"), I, Joseph J. Lemchak, hereby designate
_________________________, my _____, as the beneficiary of amounts payable upon
my death in accordance with paragraph 3(b) of the Agreement. My beneficiary's
current address is ______________, ________, New York.

      My contingent beneficiary is __________________, my __________________. My
contingent beneficiary's address is ________________________________.


Dated: _____________
                                                 -------------------------------
                                                        Joseph J. Lemchak


--------------------------
         Witness


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