ex102.htm


    SUPPLEMENTAL RETIREMENT PLAN
AGREEMENT

    


    


    This sets
forth the Supplemental Retirement Plan Agreement made effective as of December
30, 2008 between (i) COMMUNITY BANK SYSTEM, INC., a Delaware corporation and
registered bank holding company, and COMMUNITY BANK, N.A., a national banking
association, both having offices located in Dewitt, New York (collectively, the
“Employer”), and (ii) MARK E. TRYNISKI, an individual currently residing at 1964
Penfold Way, Baldwinsville, New York (“Employee”).  This Agreement
supersedes the Supplemental Retirement Plan Agreement between the parties dated
as of August 1, 2006.

    RECITALS

    
      	
               
      

            	
              A.

            	
              Employer
      and Employee are parties to an Employment Agreement dated and effective as
      of December 1, 2005 (“Employment
Agreement”).

            


    

    
      	
               
      

            	
              B.

            	
              The
      Employment Agreement provides that Employer and Employee shall enter into
      a separate agreement regarding supplemental retirement
      benefits.

            


    

    
      	
               
      

            	
              C.

            	
              This
      Agreement sets forth the terms of the parties’ agreement regarding
      supplemental retirement benefits.

            


    

    TERMS

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

    1.           Supplemental Retirement
Benefit.

    (a)           Subject
to the minimum benefit provisions of paragraph 1(b) and the vesting provisions
of paragraph 5, Employer shall pay Employee an annual supplemental retirement
benefit equal to the product of (i) 3 percent, times (ii) Employee’s years of
service with Employer, times (iii) Employee’s final average compensation, with
the product of (i) times (ii) times (iii) reduced by Employee’s other retirement
benefits.  (The terms “years of service,” “final average
compensation,” and “other retirement benefits” are defined in paragraph 2
below).  Subject to the adjustments described in paragraph 4, the
benefit described in this paragraph 1(a) initially shall be expressed as a
single life annuity (payable for Employee’s life) commencing as of the date
determined pursuant to paragraph 4.

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    (b)           The
annual supplemental retirement benefit payable pursuant to this Agreement shall
not be less than the excess (if any) of:  (i) the annual benefit that
Employee would have earned pursuant to the Community Bank System, Inc. Pension
Plan (“Pension Plan”) if the compensation limit imposed by Internal Revenue Code
Section 401(a)(17) and the maximum benefit limit imposed by Internal Revenue
Code Section 415 are disregarded; minus (ii) the annual benefit actually payable
to Employee pursuant to the Pension Plan.  For purposes of calculating
the annual benefit described in clause (i) of this paragraph 1(b), the
provisions of the Pension Plan that describe a minimum annual normal retirement
benefit and a supplemental account balance for Employee shall be
disregarded.  Any such minimum annual normal retirement benefit (but
not any supplemental account balance benefit) actually payable pursuant to the
Pension Plan, however, shall be taken into account for purposes of clause (ii)
of this paragraph 1(b).  Subject to the adjustments described in
paragraph 4, the benefit described in this paragraph 1(b) initially shall be
expressed as a single life annuity (payable for Employee’s life) commencing as
of the date determined pursuant to paragraph 4.

    2.           Definitions.

    (a)           For
purposes of paragraph 1(a), “years of service with Employer” shall be credited
to Employee in the same manner as years of service are credited to Employee
under the Pension Plan, provided that no more than 20 years of service will be
taken into account under clause (ii) of paragraph 1(a).

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)           For
purposes of paragraph 1(a), Employee’s “final average compensation” shall be the
annual average of Employee’s Base Salary (as defined in the Employment
Agreement) and cash incentive payment awarded during the five consecutive
calendar years preceding the calendar year of Employee’s
termination.  In no event will “final average compensation” take into
account any lump sum payment made to Employee in connection with a “Change of
Control” (as that term is defined in the Employment Agreement).

    (c)           For
purposes of paragraph 1(a), Employee’s “other retirement benefits” shall mean
the sum of

    
      	
               
      

            	
              (i)

            	
              the
      annual benefit earned by Employee pursuant to the Pension Plan
      (disregarding any supplemental account balance in the Pension Plan to the
      extent such account balance is attributable to Employee’s elective
      deferrals to the Deferred Compensation Plan for Certain Executive
      Employees of Community Bank System, Inc.),
plus

            


    

    
      	
               
      

            	
              (ii)

            	
              the
      annual benefit that could be provided by Employer contributions (other
      than elective deferrals) made on Employee’s behalf under (A) the Community
      Bank System, Inc. 401(k) Employee Stock Ownership Plan, and (B) the
      Deferred Compensation Plan for Certain Executive Employees of Community
      Bank System, Inc., adjusted to reflect actual earnings, losses and
      expenses credited to and charged against such Employer contributions, if
      such contributions (as adjusted) were converted to a single life annuity
      benefit payable commencing as of the last day of the calendar quarter
      immediately preceding the date benefit payments begin under this
      Agreement, using the factors applied to determine actuarial equivalents
      under the Pension Plan as of such
date.

            


    

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (d)           For
the purposes of paragraph 1(b) and paragraph 2(c)(i), Employee’s Pension Plan
benefit will be Employee’s accrued benefit under the Pension Plan, determined as
of the earlier of (i) the date Employee begins to receive such Pension Plan
benefit, or (ii) the date Employee begins to receive the supplemental retirement
plan benefit, expressed (in either case) in the form of a single life annuity
(payable for Employee’s life) commencing as of the date determined pursuant to
paragraph 4.  In the event payments of supplemental retirement
benefits commence before payments of Employee’s Pension Plan benefit commence,
the supplemental retirement benefit shall be adjusted (if necessary) to reflect
any difference between the Pension Plan benefit calculated pursuant to the
preceding sentence and the actual benefit paid to Employee pursuant to the
Pension Plan.

    3.           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”, but not including
Employee’s termination for “cause” or Employee’s voluntary termination without
“good reason,” within 2 years following a “Change of Control” that occurs during
the “Period of Employment” (as all of the foregoing quoted terms are defined in
the Employment Agreement), then Employer shall credit Employee under this
Agreement with 5 additional years of service for purposes of determining
Employee’s supplemental retirement benefit described in paragraph 1(a), subject
to the 20-year maximum described in paragraph 2(a).

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (b)           Notwithstanding
the foregoing of this paragraph 3, and to the extent consistent with Internal
Revenue Code Section 409A and this Agreement, the Board of Directors of Employer
may elect, in its sole discretion, to terminate this Agreement and pay all
benefits due Employee pursuant to this Agreement in a single lump sum payment
within 90 days following a Change of Control and Employee’s termination of
employment with Employer.

    4.           Time and Form of
Payment.

    (a)           If
vested pursuant to paragraph 5, the supplemental retirement benefit described in
paragraph 1 shall be payable in monthly installments commencing on the first day
of the seventh month following the later of (i) Employee’s 55th birthday, or
(ii) Employee’s termination of employment with Employer; provided, however,
that, if Employee separates from service with Employer due to Employee’s death,
then the survivor portion of the supplemental retirement benefit (as described
in paragraph 4(c)) shall be payable commencing on the first day of the seventh
month that follows the month during which Employee dies.

    (b)           If
vested pursuant to paragraph 5, the supplemental retirement benefit described in
paragraph 1 shall be paid in the form of a single life annuity for Employee’s
lifetime or, if elected by Employee prior to the date payments commence, in any
form of actuarially equivalent life annuity benefit (using the factors applied
to determine actuarial equivalents under the Pension Plan at the time payments
begin), with Employee’s spouse as survivor annuitant of any elected joint and
survivor annuity.  However, if Employee retires in good standing from
Employer after attaining at least age 62, then the benefit described in
paragraph 1(a) (before reduction for “other retirement benefits”), and the
benefit described in clause (i) of paragraph 1(b), shall be determined without
reduction for early retirement.

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (c)           Notwithstanding
the foregoing, if Employee dies prior to commencing receipt of payments under
this Agreement, Employee’s surviving spouse shall receive an actuarially reduced
100 percent survivor benefit determined as if Employee retired on the day prior
to his death and immediately commenced receipt of payments under both this
Agreement and the Pension Plan in the form of an actuarially reduced joint and
100 percent survivor benefit with his spouse as survivor
annuitant.  If Employee has no spouse at the time of Employee’s death,
no survivor benefits shall be paid pursuant to this Agreement.

    (d)           As
provided in paragraph 1(a) and paragraph 1(b), Employee is entitled to the
greater of the two benefits described in those paragraphs.  The
determination of which paragraph produces the greater benefit shall be made as
of the date payments commence pursuant to this Agreement and the applicable
paragraph shall govern all future payments.  The comparison of
benefits described in paragraph 1(a) and paragraph 1(b) shall not apply after
the date payments commence pursuant to this Agreement.

    5.           Vesting.

    (a)           Except
as provided in 5(b), Employee’s right to the supplemental retirement benefit
described in paragraph 1(a) shall be considered vested upon Employee’s
satisfactory completion of 36 consecutive months of service as President and
Chief Executive Officer of Employer.

    (b)           In
the event of Employee’s termination of employment due to his death or total
disability prior to completion of the 36-month service period described in (a)
above, Employee shall be deemed to be 100 percent vested in the benefit earned
pursuant to paragraph 1(a) through the date of termination.

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (c)           Employee
shall be 100 percent vested at all times in any benefit Employee may earn
pursuant to paragraph 1(b).

    6.           Funding.  Employer
shall establish a “grantor trust” (as that term is defined in Internal Revenue
Code Section 671) to aid it in the accumulation and payment of the supplemental
retirement benefit described in this Agreement; provided that the trust shall be
established with the intention that the creation and funding of the trust shall
not result in the recognition of gross income by Employee of any amount credited
under the trust prior to the date the amount is paid or made
available.  Assets of the trust, and any other assets set aside by
Employer to satisfy its obligations under this Agreement, shall remain at all
times subject to the claims of Employer’s general creditors.  Employee
and his beneficiaries shall not have any rights under this Agreement that are
senior to the claims of general unsecured creditors of
Employer.  Notwithstanding any other term or provision of this
Agreement or the trust, and to the extent consistent with Internal Revenue Code
Section 409A and this Agreement, within ten business days following Employee’s
termination of employment with Employer due to Employee’s retirement, disability
or death, or, if earlier, immediately prior to the effective date of a “Change
of Control” (as defined in the Employment Agreement), Employer shall fully fund
the trust (using the same actuarial assumptions used to establish funding in the
Pension Plan) for all benefits earned pursuant to this Agreement through the
date of Employee’s termination of employment or the effective date of the Change
of Control, as applicable.

    7.           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, this instrument shall be construed as if such invalid provisions
had not been inserted.  This Agreement shall be interpreted and
applied in all circumstances in a manner that is consistent with the intent of
the parties that amounts earned and payable pursuant to this Agreement shall not
be subject to the premature income recognition or adverse tax provisions of
Internal Revenue Code Section 409A.

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

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

    9.           Assignability and
Successors.  The right to receive the supplemental retirement
benefit described in this Agreement shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge or encumbrance, nor
subject to attachment, garnishment, levy, execution or other legal or equitable
process for the debts, contracts or liabilities of Employee or his
beneficiaries.  However, this Agreement shall be binding upon and
shall inure to the benefit of the successor of Employer through merger or
corporate reorganization.

    10.           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 August 1, 2006 Supplemental
Retirement Plan Agreement between the parties.  This Agreement cannot
be amended, modified, or supplemented in any respect, except by a subsequent
written agreement entered into by the parties.

    11.           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.

    12.           Jurisdiction and
Venue.  The jurisdiction of any proceeding between the parties
arising out of, or with respect to, this Agreement shall be in a court of
competent jurisdiction in New York State, and venue shall be in Onondaga
County.  Each party shall be subject to the personal jurisdiction of
the courts of New York State.

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
 

    The
foregoing Supplemental Retirement Plan Agreement is established by the following
signatures of the parties.

    


                            COMMUNITY BANK
SYSTEM, INC.

    


    


    
      	 
      	
              By:

            	
              /s/
      Paul M. Cantwell

            
	 
      	 
      	 
      
	 
      	
              Its:

            	
              Chair
      of Board

            
	 
      	 
      	 
      


    

    


    


                            COMMUNITY BANK,
N.A.

    


    
      	 
      	
              By:

            	
              /s/
      Bernadette R. Barber

            
	 
      	 
      	 
      
	 
      	
              Its:

            	
              Senior
      Vice President, Chief HR Officer

            
	 
      	 
      	 
      


    

    


    


    
      	 
      	 
      	
              /s/
      Mark E. Tryniski

            


    

    



    
      
         


      

      
        9