S-8

As filed with the Securities and Exchange Commission on June 30, 2017

Registration No. 333-             

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549 __________________
FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ______________
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization)	16-1213679 (I.R.S. Employer Identification No.)

5790 Widewaters Parkway

Dewitt, New York 13214

(Address of Principal Executive Offices) (Zip Code)

__________________

Community Bank System, Inc. Deferred Compensation Plan for Directors

Merchants Bancshares, Inc. 1996 Amended and Restated Compensation Plan for Non-Employee Directors

Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 2008 Compensation Plan for Non-Employee Directors and Trustees

Merchants Bank Amended and Restated Deferred Compensation Plan for Directors

Merchants Bank Salary Continuation Plan

(Full title of the plans)

__________________

George J. Getman, Esq.

Executive Vice President and General Counsel

5790 Widewaters Parkway

DeWitt, New York 13214

(Name and address of agent for service)

(315) 445-2282

(Telephone number, including area code, of agent for service)

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐
		(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE
Title of securities to be registered	Amount to be registered			Proposed maximum offering price per share			Proposed maximum aggregate offering price		Amount of registration fee
Common Stock, $1.00 par value per share		140,000	(1)	$	54.91	(2)	$	7,687,400.00	$	890.97
Common Stock, $1.00 par value per share		25,450	(1)	$	54.91	(2)	$	1,397,459.50	$	161.97
Common Stock, $1.00 par value per share		10,500	(1)	$	54.91	(2)	$	576,555.00	$	66.82
Common Stock, $1.00 par value per share		18,600	(1)	$	54.91	(2)	$	1,021,326.00	$	118.37
Common Stock, $1.00 par value per share		5,450	(1)	$	54.91	(2)	$	299,259.50	$	34.68
(1)This registration statement registers the following shares of Common Stock, and pursuant to Rule 416 of the Securities Act of 1933, as amended (the "Securities Act"), this registration statement shall be deemed to cover any additional shares of Common Stock which may be issuable under the Community Bank System, Inc. Deferred Compensation Plan for Directors, the Merchants Bancshares, Inc. 1996 Amended and Restated Compensation Plan for Non-Employee Directors, the Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 2008 Compensation Plan for Non-Employee Directors and Trustees, the Merchants Bank Amended and Restated Deferred Compensation Plan for Directors and the Merchants Bank Salary Continuation Plan to reflect stock splits, stock dividends, mergers and other capital changes:
Name of Plan					Number of Shares
Community Bank System, Inc. Deferred Compensation Plan for Directors					140,000
Merchants Bancshares, Inc. 1996 Amended and Restated Compensation Plan for Non-Employee Directors					25,450
Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 2008 Compensation Plan for Non-Employee Directors and Trustees					10,500
Merchants Bank Amended and Restated Deferred Compensation Plan for Directors					18,600
Merchants Bank Salary Continuation Plan					5,450
TOTAL					200,000
(2)Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(h) of the Securities Act and based upon the average of the high and low sales prices of Community Bank System, Inc.'s Common Stock on June 26, 2017, as reported on the New York Stock Exchange.

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PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

The documents containing the information required in Part I of Form S-8 will be delivered to participants in the Community Bank System, Inc. Deferred Compensation Plan for Directors, the Merchants Bancshares, Inc. 1996 Amended and Restated Compensation Plan for Non-Employee Directors, the Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 2008 Compensation Plan for Non-Employee Directors and Trustees, the Merchants Bank Amended and Restated Deferred Compensation Plan for Directors and the Merchants Bank Salary Continuation Plan in accordance with Form S−8 and Rule 428(b) under the Securities Act of 1933, as amended (the "Securities Act").  Such documents are not required to be, and are not, filed with the Securities and Exchange Commission ("Commission") either as part of this registration statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act.  These documents and the documents incorporated herein by reference pursuant to Item 3 of Part II of this registration statement, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.Incorporation of Documents by Reference.

The following documents, which have been filed by the registrant (Commission File No. 001-13695) with the Commission pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"), are incorporated in this registration statement by reference:

(a)  The registrant's Annual Report on Form 10−K for the fiscal year ended December 31, 2016.

(b)  The registrant's Quarterly Report on Form 10−Q for the fiscal quarter ended March 31, 2017.

(c) The registrant's Current Reports on Form 8−K filed on January 4, 2017, January 6, 2017, February 3, 2017, February 9, 2017, April 26, 2017, May 2, 2017, May 12, 2017, May 18, 2017, May 18, 2017, and June 22, 2017.

(d) The description of the Company's common stock contained in the Registration Statement on Form 8-A (File No. 001-13695) filed on December 9, 1997, including any amendments or reports filed for the purpose of updating such description.

All documents subsequently filed by the registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (other than current reports on Form 8−K furnished pursuant to Item 2.02 or Item 7.01 of Form 8−K, including any exhibits included with such information, unless otherwise indicated therein), and prior to the filing of a post−effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.

Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this registration statement to the extent that a statement contained herein or in any other

subsequently filed document which also is or is deemed to be incorporated by reference herein, or any document forming any part of the Section 10(a) prospectus to be delivered to participants in connection herewith, modifies or supersedes such statement.  Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this registration statement.

Item 4.Description of Securities.

Not applicable.

Item 5.Interests of Named Experts and Counsel.

George J. Getman, who has rendered an opinion as to the validity of the common stock being registered by this registration statement, is an officer of the registrant and, as of June 30, 2017, beneficially owned 33,244 shares of the registrant's common stock and held options to purchase 65,567 shares of the registrant's common stock.

Item 6.Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law authorizes a corporation to indemnify any director, officer, employee or other agent of the corporation.  The Registrant's Bylaws provide indemnity to the Registrant's directors and officers in such capacity or as directors or officers of a wholly-owned subsidiary of the Registrant for liability resulting from judgments, fines, expenses or settlement amounts actually and reasonably incurred in connection with any action brought against such person in such capacity to the fullest extent and in the manner set forth in and permitted by the Delaware General Corporation Law, and any other applicable law, as from time to time in effect. Under Delaware law and the Bylaws, no indemnification may be provided for any person with respect to any matter as to which he or she shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Registrant or of such subsidiary.

In addition, as permitted under Delaware law, the Registrant maintains liability insurance covering directors and officers of the Registrant and its subsidiaries.

Item 7.Exemption from Registration Claimed.

Not applicable.

Item 8.Exhibits.

4.1 Certificate of Incorporation of registrant, as amended.  Incorporated by reference to Exhibit No. 3.1 to the Registration Statement on Form S-4 filed with the Commission on October 20, 2000.

4.2 Certificate of Amendment of Certificate of Incorporation of registrant.  Incorporated by reference to Exhibit No. 3.1 to the Quarterly Report on Form 10-Q filed with the Commission on May 5, 2004.

4.3 Certificate of Amendment of the Certificate of Incorporation of registrant.  Incorporated by reference to Exhibit No. 3.1 to the Quarterly Report on Form 10-Q filed with the Commission on August 9, 2013.

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4.4 Bylaws of registrant.  Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Commission on July 24, 2007.

5.1+ Opinion of George J. Getman regarding to the validity of the shares being registered.

23.1+ Consent of PricewaterhouseCoopers LLP.

23.2+ Consent of George J. Getman (included in Exhibit 5.1).

24.1+ Power of Attorney(contained on the Signature Page of this registration statement).

99.1+ Community Bank System, Inc. Deferred Compensation Plan for Directors.

99.2 Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 1996 Compensation Plan for Non-Employee Directors. Incorporated by reference to Exhibit 10.3 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.

99.3 Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 2008 Compensation Plan for Non-Employee Directors and Trustees. Incorporated by reference to Exhibit 10.4 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.

99.4 Merchants Bank Amended and Restated Deferred Compensation Plan for Directors.  Incorporated by reference to Exhibit 10.7 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.

99.5 Merchants Bank Salary Continuation Plan.  Incorporated by reference to Exhibit 10.9 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.

+ Filed herewith

Item 9.Undertakings.

(a)The undersigned registrant hereby undertakes:

(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and

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(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

(2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b)The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Town of DeWitt, State of New York, on the 30^th day of June, 2017.

COMMUNITY BANK SYSTEM, INC.
By:	/s/ Mark E. Tryniski
	Mark E. Tryniski
	President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark E. Tryniski and Scott A. Kingsley, and each of them, his or her true and lawful attorneys−in−fact and agents, with full power of substitution and re−substitution, for him or her in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this registration statement, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys−in−fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys−in−fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ Mark E. Tryniski Mark E. Tryniski	President, Chief Executive Officer and Director (Principal Executive Officer)	June 30, 2017
/s/ Scott Kingsley Scott Kingsley	Treasurer and Chief Financial Officer (Principal Financial Officer)	June 30, 2017
/s/ Sally A. Steele Sally A. Steele	Director and Chair of the Board	June 30, 2017

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SIGNATURE	TITLE	DATE
/s/ Brian R. Ace Brian R. Ace	Director	June 30, 2017
/s/ Mark J. Bolus Mark J. Bolus	Director	June 30, 2017
/s/ Jeffrey L. Davis Jeffrey L. Davis	Director	June 30, 2017
/s/ Nicholas A. DiCerbo Nicholas A. DiCerbo	Director	June 30, 2017
/s/ Neil E. Fesette Neil E. Fesette	Director	June 30, 2017
/s/ James A. Gabriel James A. Gabriel	Director	June 30, 2017
/s/ Michael R. Kallet Michael R. Kallet	Director	June 30, 2017
/s/ John Parente John Parente	Director	June 30, 2017
/s/ Raymond C. Pecor, III Raymond C. Pecor, III	Director	June 30, 2017
/s/ Eric E. Stickels Eric E. Stickels	Director	June 30, 2017
/s/ John F. Whipple John F. Whipple, Jr.	Director	June 30, 2017

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INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
4.1	Certificate of Incorporation of registrant, as amended.  Incorporated by reference to Exhibit No. 3.1 to the Registration Statement on Form S-4 filed with the Commission on October 20, 2000.
4.2	Certificate of Amendment of Certificate of Incorporation of registrant.  Incorporated by reference to Exhibit No. 3.1 to the Quarterly Report on Form 10-Q filed with the Commission on May 5, 2004.
4.3	Certificate of Amendment of the Certificate of Incorporation of registrant.  Incorporated by reference to Exhibit No. 3.1 to the Quarterly Report on Form 10-Q filed with the Commission on August 9, 2013.
4.4	Bylaws of registrant.  Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Commission on July 24, 2007.
5.1+	Opinion of George J. Getman regarding to the validity of the shares being registered.
23.1+	Consent of PricewaterhouseCoopers LLP.
23.2+	Consent of George J. Getman (included in Exhibit 5.1).
99.1+	Community Bank System, Inc. Deferred Compensation Plan for Directors.
99.2	Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 1996 Compensation Plan for Non-Employee Directors. Incorporated by reference to Exhibit 10.3 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.
99.3	Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 2008 Compensation Plan for Non-Employee Directors and Trustees. Incorporated by reference to Exhibit 10.4 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.
99.4	Merchants Bank Amended and Restated Deferred Compensation Plan for Directors.  Incorporated by reference to Exhibit 10.7 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.
99.5	Merchants Bank Salary Continuation Plan.  Incorporated by reference to Exhibit 10.9 to Merchants Bancshares, Inc.'s Annual Report on Form 10-K filed with the Commission on March 15, 2011.

_______________________

+ Filed herewith

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EX-5.1

EXHIBIT 5.1

5790 Widewaters Parkway

DeWitt, New York 13214

George J. Getman

Executive Vice President and General Counsel

June 30, 2017

Community Bank System, Inc.

5790 Widewaters Parkway

DeWitt, New York 13214

Ladies and Gentlemen:

I am the Executive Vice President and General Counsel of Community Bank System, Inc., a Delaware corporation (the "Company") and have acted as its counsel in connection with the registration statement on Form S-8 (the "Registration Statement") being filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), relating to the registration of 200,000 shares of common stock, $1.00 par value per share (the "Shares"), which may be issued pursuant to the Community Bank System, Inc. Deferred Compensation Plan for Directors, the Merchants Bancshares, Inc. 1996 Amended and Restated Compensation Plan for Non-Employee Directors, the Merchants Bancshares, Inc. and Subsidiaries Amended and Restated 2008 Compensation Plan for Non-Employee Directors and Trustees, the Merchants Bank Amended and Restated Deferred Compensation Plan for Directors and the Merchants Bank Salary Continuation Plan (collectively, the "Deferred Compensation Plans").

For purposes of this letter, I have examined such documents, records, certificates, and other instruments as I deemed necessary as a basis for this opinion.  As to questions of fact material to the opinion expressed below, I have, when relevant facts were not independently established by me, relied upon certificates of officers of the Company or other evidence satisfactory to me.  In all such examinations, I have assumed (i) the genuineness of all signatures, (ii) the authenticity of all documents tendered to me as originals, and (iii) the conformity to original documents of all documents submitted to me as copies.  For purposes of rendering the opinion expressed below, I have assumed that (i) any conditions to the issuance and sale of the Shares pursuant to the Deferred Compensation Plans made thereunder have been or will be satisfied in full at the time of each issuance of Shares pursuant to such Deferred Compensation Plan, (ii) at the time of issuance and sale of each of the Shares pursuant thereto, the Deferred Compensation Plans will remain in effect and will not have been amended or modified in any manner that affects adversely the validity of the Shares upon issuance under the terms of the respective Deferred Compensation Plan, and (iii) at the time of issuance and sale of each of the Shares, there will be authorized but unissued shares of common stock available to the Company in sufficient amounts.

Based upon the foregoing and subject to the assumptions, limitations, and qualifications set forth herein, I am of the opinion that, subject to the Registration Statement becoming

effective under the Act and compliance with all other applicable securities laws, the Shares have been duly authorized by the Company and that, when issued in accordance with the terms of the Deferred Compensation Plans, will be legally issued, fully paid and non-assessable.

I am a member of the bar of the State of New York, and the opinion expressed herein is limited to matters controlled by the federal securities laws of the United States of America and the General Corporation Law of the State of Delaware, and I do not express any opinion herein concerning any other law.  This opinion speaks as of today's date and is limited to present statutes, regulations or judicial interpretations.  In rendering this opinion, I assume no obligation to revise or supplement this opinion should present laws, regulations or judicial interpretations be changed by legislative or regulatory action, judicial decision or otherwise.

I am furnishing this opinion in connection with the filing of the Registration Statement with the Commission and this opinion is not to be used, circulated, quoted or otherwise referred to for any other purpose without my express written consent.

I hereby consent to the filing of this letter as an exhibit to the Registration Statement and to the reference made to me under the heading "Interests of Named Experts and Counsel" set forth in the Registration Statement.  In giving this consent, I do not thereby admit that I am included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.

Very truly yours,

/s/ George J. Getman    

George J. Getman

Executive Vice President and General Counsel

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EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated March 1, 2017 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in Community Bank System, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016.

/s/ PricewaterhouseCoopers LLP

Buffalo, New York

June 30, 2017

EX-99.1

EXHIBIT 99.1

COMMUNITY BANK SYSTEM, INC.

DEFERRED COMPENSATION PLAN FOR DIRECTORS

Amended and Restated as of January 1, 2005

ARTICLE I

PURPOSE AND DEFINITIONS

Section 1.01 – Purpose:

The Company's Board of Directors adopted the Community Bank System, Inc. Deferred Compensation Plan for Directors, effective as of January 19, 1994, to provide a uniform mechanism for the elective deferral by members of the Board of Directors of fees payable to them by the Company and its subsidiaries for their services as directors.  The Plan has beenamended since 1994.  In order to conform to Internal Revenue Code Section 409A, the Plan is amended and restated in its entirety in this document, which shall be effective as of January 1, 2005.  This amended and restated Plan shall govern the rights and obligations of Plan participants and Community Bank System, Inc. with respect to all deferred compensation benefits earned under this Plan and all predecessor versions of this Plan, including all benefits earned by a participant prior to January 1, 2005.

Section 1.02 – Definitions:

For purpose of this plan, the following terms shall have the meanings ascribed to them below:

(a)"Account" shall mean the special unfunded memorandum account or accounts maintained by the Company on its books for a Participant under this Plan in accordance with Section 3.01.

(b)"Beneficiary" shall mean the beneficiary or beneficiaries designated by a Participant, as provided by Section 3.03, to receive Benefits payable (if any) subsequent to such Participant's death.

(c)"Benefits" shall mean the benefits payable to a Participant or (his Beneficiary) under the terms of this Plan, as more particularly described in Section 3.01.

(d)"Board of Directors" shall mean the Board of Directors of the Company.

(e)"Change in Control" shall mean a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, determined in either case in accordance with guidance provided by the United States Secretary of the Treasury pursuant to Internal Revenue Code Section 409A.

(f)"Change of Election Form" shall mean the written agreement between the Company and a Participant, in a form provided by the Plan Administrator, pursuant to which the Participant modifies or revokes his election to defer Fees to be earned in a subsequent Plan Year, delays the Distribution Date and/or changes the number of installments in which Benefits shall be paid.  Change of Election Forms must be filed with the Plan Administrator no later than the applicable date(s) determined pursuant to Sections 2.02(c) and 3.01.  Subject to the other terms of the Plan, and such limitations as may be imposed by the Plan Administrator, a Change of Election Form may be made applicable to a Participant's entire Benefit or to Benefits attributable to Fees deferred during one or more calendar years, as designated by the Participant.

(g)"Company" shall mean Community Bank System, Inc., a Delaware Corporation and registered bank holding company, and Community Bank, N.A., a national banking association.

(h)"Deferred Fees" shall mean the Fees which a Participant elects to defer pursuant to his Participation Agreement, as provided by Section 2.02.

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(i)"Deferred Shares" shall mean Shares which could have been purchased with Deferred Fees and Dividend Equivalents.

(j)"Director" shall mean a member of the Board of Directors, provided that such member is not an employee of the Company.

(k)"Distribution Date" shall mean the date or dates elected by a Participant pursuant to his Participation Agreement as the date on which the payment of Benefits under this Plan is to commence.

(l)"Dividend Equivalents" shall mean an amount equal to the dividends which would have been received (without reduction for taxes which would have been payable on such dividends) had Shares equal in number to Deferred Shares then credited to the Account been issued and outstanding.

(m)"Fees" shall mean the fees payable to a Director in his/her capacity as a Director, as authorizedby the Company's ByLaws, as in effect from time to time.

(n)"Participant" shall mean any Director who has elected to defer any portion of his Fees pursuant to Section 2.02.

(o)"Participation Agreement" shall mean the written agreement between the Company and a Participant, in a form provided by the Plan Administrator, which sets forth certain provisions and elections relative to the Plan, the amount of the Deferred Fees, the time, form and manner of paying Benefits, and such other terms and conditions determined by the Plan Administrator to be appropriate and consistent with the terms of this Plan.

(p)"Plan" shall mean the Deferred Compensation Plan for Directors, as amended and restated in this document, which may be amended from time to time.

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(q)"Plan Administrator" shall mean the Trust Department of Community Bank, National Association, or such other person, committee, or entity which may be designated by the Board of Directors as Plan Administrator from time to time.

(r)"Plan Year" shall mean each calendar year.

(s)"Shares" shall mean shares of the Common Stock of the Company.

ARTICLE II

DEFERRAL ELECTION

Section 2.01 – Eligibility:

All Directors who are not employees of the Company shall be eligible to participate in this Plan.

Section 2.02 – Enrollment in Plan:

(a)A Director may become a Participant and agree to defer Fees not yet earned by entering into a Participation Agreement prior to the first day of the Plan Year in which the Participation Agreement is to become effective; provided, however, that a new Director may enter into a Participation Agreement for Fees not yet earned, if the new Director's Participation Agreement is executed and delivered to the Plan Administrator within thirty (30) days of the date the new Director commenced service as a member of the Board of Directors.

(b)The Deferred Fees in a given Plan Year may be any percentage (in any multiple of 5%) of the Participant's Fees, but in no event less than $500 in any Plan Year.

(c)Except to the extent otherwise provided by this Plan, a Participant may modify or revoke his Participation Agreement with respect to any Fees to be earned in a subsequent Plan Year by delivery of an executed Change of Election Form to the Plan Administrator at least thirty (30) days prior to the beginning of the Plan Year for which such revocation or modification

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is to be effective.  Notwithstanding any such revocation or modification, unless the Participant's distribution election is modified, amounts previously deferred shall be paid as previously elected by the Participant.

ARTICLE III

BENEFITS

Section 3.01 – Stock Benefits:

(a)The Plan Administrator shall establish an Account for each Participant and shall credit to such Account:

(1)on the date such Participant would have otherwise received payment of his Deferred Fees, such number of Deferred Shares that equals the number of Shares which could have been purchased with such Deferred Fees; and

(2)until the Distribution Date, or later if the Participant elects to receive distributions over the three, five or ten year period provided for in Section 3.01(d), such additional number of Deferred Shares which could have been purchased with Dividend Equivalents.

(b)The number of Deferred Shares shall be subject to adjustment, as the Plan Administrator deems appropriate, to reflect stock dividends, stock splits, stock combination, and reorganization affecting Shares.

(c)The Account shall be payable to the Participant (or his Beneficiary) only in Shares, in a number equal to the Deferred Shares credited to the Participant's Account; provided, however, that fractional Shares may, at option of the Company,be paid in cash by the Company.

(d)As of the Distribution Date, the Account shall be payable, at the Participant's election as set forth in his Participation Agreement or applicable Change of Election Form, in

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either:  (1) lump sum; or (2) three, five, or ten annual installments.  Except as provided in Section 3.01(e), such election shall be irrevocable.

(1)In the event the Participant elects to receive his distribution in the form of installments as provided for in Section 3.01(d), the first such distribution shall be on the Distribution Date, and all subsequent distributions shall be made on or about January 2 of each calendar year thereafter.

(2)Each of the installment distributions provided to the Participant shall equal a number of Shares derived by dividing the number of Deferred Shares remaining in the Participant's Account by the number of remaining installments distributable to the Participant.

(3)For the purposes of determining the amount of an installment payment, "market value" shall be the closing price of the Company's stock on the last business day immediately preceding the date of the installment payment.

(4)As provided in Section 3.01(a)(2), and in accordance with the Company's dividend reinvestment practices for common stock owners, the number of Deferred Shares credited to the Participant's Account shall include such additional number of Deferred Shares which could have been purchased with Dividend Equivalents that are credited during the installment payment period.

(e)To the extent a distribution would otherwise be made or commence on a specified Distribution Date elected by a Participant, the Participant may elect to delay the Distribution Date or change the number of installments, provided that the election will not take effect until the first day of the 12^th month that follows the Plan Administrator's receipt of the election, the first payment with respect to which such election is made must be deferred at least five years from the previously-specified Distribution Date, and the election must be received by the Plan Administrator at least 12 months prior to the date of the first scheduled payment.  A distribution

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election may not be altered after Benefit payments commence pursuant to that election.  Further, except as provided in Section 4.01, no distribution election may be altered to accelerate a Distribution Date.  For purposes of Internal Revenue Code Section 409A, installment payments shall be considered a single payment.

(f)Notwithstanding any other term or provision in the Plan, a Participant may make or change a distribution election with respect to Fees deferred prior to December 31, 2006 by filing a completed Change of Election Form with the Plan Administrator on or before December 31, 2006; provided, however, that no such Change of Election Form may postpone payments otherwise due in 2006 or accelerate into 2006 payments otherwise due after 2006.

(g)In the event of a Participant's death prior to payment of the Account in full, the balance of his Account shall be payable to his Beneficiary in accordance with the terms of this Section and the Participant's election under his Participation Agreement.

(h)The Participant (or his Beneficiary) shall have no right to sell, assign, transfer or otherwise convey or encumber his right to receive any payment of Benefits or any other rights to the Account.

(i)The Company shall not set aside money in trust or escrow or commit any act to secure payment of the Benefits but shall make payment when due by delivering Shares from the Company's treasury Shares or authorized but issued Shares (with fractional Shares paid in cash at the option of the Companyfrom the Company's general assets).  Participants (or their Beneficiaries) shall have no rights against the Company, except as general unsecured creditors of the Company, with respect to their Accounts and Benefits.

Section 3.02 – Change in Control:

Upon the occurrence of a Change in Control, each Participant will receive an immediate distribution of shares of Common Stock equal to the number of Deferred Shares credited to the

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Participant.  Upon the distribution of all benefits pursuant to this Section 3.02, the Plan shall terminate.

Section 3.03 – Beneficiary Designations:

(a)A Participant may designate, pursuant to his Participation Agreement, one or more Beneficiaries to receive payment of his Benefits in the event of his death.  Such designation may be changed by filing written notice with the Plan Administrator in a form provided by the Plan Administrator.  If no designation is made, the Participant's estate shall be deemed to be the Participant's Beneficiary.

(b)Payments shall be made equally to all Beneficiaries if more than one Beneficiary is designated and the Participant fails to provide otherwise pursuant to his Participation Agreement or a subsequent written notice to the Plan Administrator.

(c)All elections and designations made by the Participant shall be binding upon his Beneficiary.

Section 3.04 – Forfeitability:

Amounts credited to a Participant's Account and Benefits under this plan shall not be subject to forfeiture for any reason other than termination or removalof the Participantas aDirector for "cause" (as defined below).  In the event the Participant is terminated or removedas aDirector for cause, he shall forfeit all amounts credited to his Account and all Benefits to which he would otherwise be entitled under the terms of this Plan and his Participation Agreement.  For the purposes of this Section, "cause" shall mean acts of dishonesty or moral turpitude which materially affect the Company, conduct tending to damage the reputation of the Company, conviction of a felony, or willful neglect or refusal to perform his duties as a Director to the Company.

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ARTICLE IV

WITHDRAWALS

Section 4.01 – Emergency:

(a)In the case of an unforeseeable emergency prior or subsequent to the commencement of Benefit payments, a Participant may apply to the Plan Administrator for withdrawal of an amount reasonably necessary to satisfy the emergency need.  If such application for withdrawal is approved by the Plan Administrator, the withdrawal will be effective at the later of the date specified in the Participant's application or the date of approval by the Plan Administrator and shall be payable in lump sum within thirty (30) days of such effective date.

(b)For the purposes of this Plan, the term "unforeseeable emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or a dependent of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  Unexpected and unreimbursed expenses which cause great hardship to one Participant may not cause such hardship to another Participant.  Means available to one Participant for meeting a real emergency of a financial nature may not be available to another Participant.  Withdrawals for foreseeable expenditures normally budgetable, such as down payments on a home or purchase of an auto or college expense, will not be permitted.  The Plan Administrator shall not permit withdrawal for unforeseeable emergency to the extent that such hardship is or may be relieved:

(1)through reimbursement of compensation by insurance or otherwise;

(2)by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or

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(3)by the cessation of the deferral of Fees under the Plan.

(c)In no event shall the amount of a withdrawal for unforeseeable emergency exceed the amount of Benefits which would have been available if the Participant had terminated his participation in this Plan at the time of withdrawal.  Notwithstanding any other provision of this Plan, if a Participant makes a withdrawal, the amount of the Participant's Benefits under the Plan shall be appropriately reduced to reflect such withdrawal.  The remainder of any payable Benefits shall be payable in accordance with otherwise applicable provisions of this Plan and the Participant's Participation Agreement.

(d)In the event a Participant receives a withdrawal for an unforeseeable emergency, then the Participant's election to defer Fees for the calendar year of the withdrawal shall be cancelled with respect to Fees earned following the date of the withdrawal.  Fees deferred prior to such cancellation shall be payable in accordance with the otherwise applicable provisions of this Plan and the Participant's Participation Agreement.  Subject to the election provisions of the Plan, a Participant whose election to defer Fees is cancelled in accordance with this Section 4.01(d) may elect to defers Fees earned in a subsequent calendar year by completing a new Participation Agreement.

(e)Unforeseeable emergency withdrawals pursuant to this Article IV shall be subject in all events to the applicable requirements of Internal Revenue Code Section 409A.

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ARTICLE V

NONASSIGNABILITY CLAUSE

Section 5.01 – Nonassignability:

No Participant or Beneficiary nor any other designee shall have any right to commute, sell, assign, pledge, transfer or otherwise convey or encumber the right to receive any payments under this Plan, which payments and rights are expressly declared to be nonassignable and nontransferable.  Nor shall any unpaid Benefits be subject to attachment, garnishment or execution, or be transferable by operation of law in the event of bankruptcy or insolvency of the Participant except to the extent otherwise required by law.

ARTICLE VI

PLAN ADMINISTRATOR

Section 6.01 – Duties of Plan Administrator:

The Plan Administrator shall be charged with the general administration of the Plan on behalf of the Company, and shall have all powers necessary to accomplish those purposes, including, but not by way of limitation, the following:

(a)To construe, interpret and administer the Plan;

(b)To make allocations and determinations required by the Plan;

(c)To compute and certify to the Company the amount and kind of Benefits payable to Participants or their Beneficiaries;

(d)To authorize all disbursements by the Company pursuant to the Plan;

(e)To maintain the necessary records for the administration of the Plan;

(f)To make and publish such rules for the regulation of the Plan consistent with its terms;

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(g)To enter into Participation Agreements with Participants on behalf of the Company; and

(h)To accept, review and implement Change of Election Forms.

Section 6.02 – Compensation, Indemnity and Liability:

The Plan Administrator shall receive such compensation for its services under this Plan as agreed to by the Company.  The Plan Administrator shall not be liable for any act or omission on its part, except its own willful misconduct or gross negligence.  The Company shall indemnify and save harmless the Plan Administrator against any and all expenses and liabilities arising out of the performance of its duties under this Plan, except expenses and liabilities arising out of its own willful misconduct or gross negligence.

Section 6.03 – Determinations of Plan Administrator:

The Plan, each Participation Agreement, and each Change of Election Form shall be interpreted and applied in all circumstances in a manner that is consistent with the Company's intentions that the Plan satisfy the requirements of Internal Revenue Code Section 409A and that Benefits accumulated and paid pursuant to the Plan shall not be subject to the premature income recognition or adverse tax provisions of Internal Revenue Code Section 409A.  All determinations of the Plan Administrator in the interpretation and administration of this Plan (including, but not limited to, determinations as to the amounts of the Benefits payable to a Participant or his Beneficiary) shall be conclusive and binding upon Participants and their Beneficiaries.

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ARTICLE VII

SOURCE OF PAYMENTS

Section 7.01 – Source of Payments:

Unless otherwise directed by the Board, all Benefits under this Plan shall be paid by the Company in the form of Shares delivered from the Company's treasury Shares or authorized but unissued Shares (with fractional Shares paid in cash from the general assets of the Company).  No special fund shall be established and no special segregation of assets shall be made to assure the payment of Benefits under this Plan.  A Participant shall have no right, title or interest whatever in or to any investments which the Company may make to aid it in meeting its obligations under this Plan, pursuant to Section 7.02 or otherwise.  Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company or the Plan Administrator and any Participant or any other person.  To the extent any person acquires a right to receive payments under this Plan from the Company, such right shall be no greater than the right of an unsecured general creditor of the Company.

Section 7.02 – Reserves:

For the purpose of aiding the Company in providing for payments under this Plan, the Company may maintain a reserve fund which shall remain, at all times, a part of the general assets of the Company.  The Company shall not be obliged to maintain such a reserve fund.  If a reserve fund is maintained, its funds may be invested in securities, certificates of deposit, insurance or annuity contracts, or any other assets selected by the Company in its sole discretion, without the approval or direction of any Participant.

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Section 7.03 – Constructive Receipt:

It is intended that Deferred Fees and Benefits under this Plan shall not be includible in a Participant's gross income until actual receipt of such amounts by the Participant.  However, neither the Company nor the Plan Administrator represent or warrant to any Participant that, under existing or future law, rules, regulations, or determinations of the Internal Revenue Service of any court, such amounts shall not be includible in a Participant's gross income prior to actual receipt.

ARTICLE VIII

MISCELLANEOUS

Section 8.01 – Continued Employment:

Participation in this Plan shall not give any Participant the right to be retained as a Director or employee of the Company.

Section 8.02 – Taxes and Fees:

(a)The Company shall be entitled to reduce any amount payable or creditable to a Participant (including, but not limited to, Deferred Fees, the Fees which the Participant does not elect to defer, and Benefits under this Plan) or to otherwise require adequate provision for payment of FICA, FUTA, and Federal and state income tax withholding, or similar taxes which the Company is required by law to withhold.

(b)In addition, the amount of any Benefit payable to a Participant (or his Beneficiary) shall be reduced by the fees and expenses paid by the Company to the Plan Administrator with regard to the administration and provision of such Benefits in the event such Participant's employment as a Director is terminated prior to his Distribution Date for any reason

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other than the merger or consolidation of the Company into another corporation or organization with the other corporation or organization being the survivor.

Section 8.03 – Amendment or Termination of Plan:

The Company shall have the right to amend or terminate this Plan at any time; provided, however, no such amendment or termination shall affect in any way the Benefits which the Participant or his Beneficiary is entitled to receive as of the date of such amendment or termination.

Section 8.04 – Change of Business Form:

The Company shall not merge or consolidate with any other corporation or organization or terminate its existence without having made adequate provision for the fulfillment of its obligations under this Plan and the Participant Agreements.

Section 8.05 – Construction:

Words of masculine gender shall mean and include correlative words of the feminine and neutral genders and words importing the singular shall mean and include the plural number and vice versa.

Section 8.06 – Effective Date:

This Plan is effective as of January 1, 2005.

Section 8.07 – Law:

This Plan shall be governed by the laws of the State of New York, other than its law respecting choice of law, to the extent not preempted by any Federal law.

COMMUNITY BANK SYSTEM, INC.
COMMUNITY BANK, N.A.
By:	/s/ Sanford A. Belden
	Sanford A. Belden
Title:	President and Chief Executive Officer

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